Natural gas prices and related ETFs surged Monday as traders anticipate rising heating demand in cooler winter months ahead.
On Monday, the United States Natural Gas Fund (NYSEArca: UNG) gained 5.2% and the iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ) rose 4.0% as natural gas futures added 5.3% to $3.14 per million British thermal units.
Traders also capitalized on the turning sentiment with leveraged long ETFs. For instance, three-times leveraged-long VelocityShares 3x Long Natural Gas ETN (NYSEArca: UGAZ) surged 15.3% Monday while the ProShares Ultra Bloomberg Natural Gas (NYSEArca: BOIL), which takes the two times or 200% daily performance of natural gas, advanced 9.4%.
Natural gas futures strengthened as traders reacted to bullish weather forecasts for most of the U.S. over the next coming weeks, which should fuel heating demand. Natgas prices typically rise ahead of the winter as colder weather adds to heating demand, with November through March as the peak period for U.S. gas consumption, according to Investing.com.
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“Weather systems with rain and snow will impact West and north-central U.S. with chilly conditions and lows mostly of teens to 30s,” according to natgasweather.com for the November 6 to November 12 period, FXEmpire reports. “The East Coast will be warm Monday with highs of upper 60s to 80s, but will drop into the upper 40s to lower 60s as a cool front sweeps through mid-week. A rather cold weather system will track across southern Canada and across the upper Midwest and Northeast Friday to Saturday for a surge in heating demand. The southern U.S. will be mild to warm with highs mainly in the 70s and 80s. Overall, demand will be moderate through Thursday, then high Friday through Sunday.”
Market observers are also looking to this week’s storage data due on Thursday, which is anticipated to reveal a build of between 11 and 21 billion cubic feet int he week ended November 3, compared to a 65 bcf build in the preceding week and a five-year average rise of 45 bcf.
According to the U.S. Energy Information Administration, total natgas in storage was 3.775 trillion cubic feet, or 4.5% lower than levels at this time last year and 1.1% below the five-year average for this time of year.
For more information on the natgas market, visit our natural gas category.