Aggressive, risk-tolerant traders can exploit plummeting natural gas prices with leveraged exchange traded products such as the VelocityShares Daily 3x Inverse Natural Gas ETN (NYSEArca: DGAZ), which seeks to provide the daily inverse 3x or -300% performance of NYMEX natural gas futures. The ProShares UltraShort Bloomberg Natural Gas (NYSEArca: KOLD) provides the daily inverse 2x or -200% performance.
Many observers, though, expect that higher demand for natural gas to cool homes and fire power plants, along with lower production, could steadily trim away at the large natural gas inventories even in a normal summer season. But the problem is supplies still remain elevated.
“On the production side, the Energy Information Administration is forecasting Natural Gas production from shale formations to increase by 684 million cubic feet per day in July vs. June with production expected to increase in each of the 7 major Natural Gas producing regions. A look at the most recent Commitment of Traders report shows a major shift by the non-commercial sector of the market as these large speculative accounts and commodity funds have overall reversed their speculative positions from net-long to net-short during the reporting period ending June 6,” according to OptionsExpress.
For more information on the natgas market, visit our natural gas category.