Traders, though, should keep in mind that the summer is winding down and demand for fuel typically declines as the weather cools in the fall. Some analyst are already warning of a potentially new record high natural gas inventory levels in the months ahead.
“Seasonally, the market has turned a major corner,” Andy Weissman, chief executive of EBW AnalyticsGroup, said in a note. “With the heart of the summer already behind us and relatively benign weather expected for the remainder of August and September, the picture for natural gas over the next four to six weeks looks highly negative.”
If traders share a similar outlook for the fall season, one may utilize inverse or bearish ETF options to hedge bets in the coming months. For instance, the VelocityShares Daily 3x Inverse Natural Gas ETN (NYSEArca: DGAZ) seeks to provide the daily inverse 3x, or -300%, performance of the NYMEX natural gas futures. The ProShares UltraShort Bloomberg Natural Gas (NYSEArca: KOLD) provides the daily inverse 2x, or -200%, performance.
For more information on the natgas market, visit our natural gas category.
United States Natural Gas Fund