Natural gas ETFs have been regaining ground on colder winter conditions and higher heating demand over the short-term.
Over the long-term, gas prices may find support from rising exports as the U.S. becomes the world’s third-largest producer of liquefied natural gas for export.
The United States Natural Gas Fund (NYSEArca: UNG) gained 8.7% over the past week as NYMEX natural gas futures rose $3.349 per million British thermal units.
According to S&P Global Platts, the U.S. has exported an average 7.4 billion cubic feet per day of gas in November, compared to the 7 billion cubic feet per day imported, the Wall Street Journal reported.
United States Natural Gas Fund
It has been almost 60 years since the U.S. was a net exporter of natural gas , according to the U.S. Energy Information Administration. The Energy Department expects the U.S. is on track to become the world’s third-largest producer of liquefied natural gas for export by 2020.
The U.S. lifted restrictions on crude oil exports last year, allowing tankers to be shipped overseas for the first time in almost a half century.
“It’s indicative of things to come,” Sid Perkins, managing partner at the brokerage Ion Energy Group, told the WSJ. Natural gas is “going to be taking on the characteristics of a global-macro market, like crude, where global factors will influence what happens to gas.”
The open global markets will be a welcomed sight for U.S. natural gas as the booming shale oil industry has produced a copious amount of natural gas as a by product, contributing to the ongoing natural gas glut that dragged gas prices down to a 17-year low in March.
The U.S. largely exports to Mexico and Canada, countries in the North American Free Trade Agreement. According to the EIA, new pipelines running across the border has helped shipments to Mexico hit an all-time high in August, accounting for almost 6% of total U.S. gas production.
The U.S. is also looking into natural gas shipments to countries like Singapore and South Korea, which also have free trade agreements with the U.S.
However, some observers are worried that a Donald Trump presidency could affect U.S. trade policy with Mexico and slow the rise of gas exports.
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