Winter temperatures are arriving in some parts of the U.S. and natural gas exchange traded products are heating up as a result. As of midday Wednesday, the United States Natural Gas Fund (NYSEArca: UNG) was higher by more than 12%.
Additionally, for the more aggressive traders, the three-times leveraged-long VelocityShares 3x Long Natural Gas ETN (NYSEArca: UGAZ) and the ProShares Ultra Bloomberg Natural Gas (NYSEArca: BOIL), which takes the two times or 200% daily performance of natural gas, notched impressive intraday gains.
“The $625 million VelocityShares Daily 3x Long Natural Gas ETN, ticker UGAZ, rose 37 percent as of 11:01 a.m. in New York, bringing its gain this week to 79 percent,” reports Bloomberg.
This week’s rally in natural gas defies previous expectations that the upside for the commodity that was seen in October would become more muted in November.
Natural Gas Prices
Rising production out of the shale industry may cap natural gas prices. Genscape Inc. said its daily pipeline flow estimate revealed that the lower 48 states’ production setting a new record for the weekend.
“Natural gas soared the most in nine years, climbing past the $4 mark to the highest level since February 2014. Chilly weather has taken hold across much of the central and eastern U.S., with Texas seeing its earliest snowfall ever this week. Another cold blast is set to arrive this weekend, with relief likely coming by Thanksgiving,” according to Bloomberg.
Related: Natural Gas ETFs Bring the Heat
The trade spat between the U.S. and China is also a factor to consider. In response to the latest round of U.S. tariffs, China proposed a 25% levy on liquefied natural gas, or LNG. Alternatively, China would get its gas fix from Australia, Qatar, Russia or its own domestic sources as the emerging Asian economy develops its own sources. However, there is speculation the trade tensions between the U.S. and China could soon ease.
UNG, the most heavily traded natural gas ETF, is up more than 53% year-to-date, making it one of the best-performing commodities ETFs this year.
For more information on the natural gas market, visit our natural gas category.