Natural Gas ETF is in a Precarious Spot

“And as we enter the week in which standard December options are set to expire, the $31 area takes on another layer of significance: It’s home to peak open interest for the series, with 7,875 calls in residence at this strike price,” according to Schaeffer’s. “Notably, a review of the volume history at the December 31 call suggests the bulk of these contracts were sold to open on the supremely inopportune date of Nov. 13, just ahead of a historically massive single-day rally for UNG (to be followed by an encore performance just two days later).”

Any hint of colder-than-expected temperatures could renew UNG bullishness. Recent inventories data indicate a smaller-than-anticipated drawdown of 77 billion cubic feet, compared to the five-year average withdrawal of 79 Bcf but it was still higher than last year’s 59 Bcf pull. Total gas in storage fell to 2,914 Bcf, or 722 Bcf below last year and 723 Bcf below the five-year average.

For more information on the natgas market, visit our natural gas category.