It might be a milder-than-expected winter wonderland after the latest weather forecasts hinted at milder temperatures in late December, causing natural gas exchange-traded funds (ETFs) to decline sharply.

As such, the United States Natural Gas Fund (NYSEArca: UNG) declined 6.9% Friday as Nymex natural gas futures dropped 6.3%, breaking below its $4 level to $3.87 per million British thermal units. From a technical standpoint, UNG was also testing its short-term support at the 50-day simple moving average.

On the leveraged ETF front, the forecast caused the VelocityShares 3x Long Natural Gas ETN (NYSEArca: UGAZ) to fall over 20 percent.

“Trading gas at this time of year is a weather trade, and it varies with the forecasts,” said James Williams, energy economist at WTRG Economics.

Dimming the natural gas outlook, the latest weather forecasts pointed to mild conditions leading to below-average gas-weighted degree days through the end of the month, the Natural Gas Intelligence reports.

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