The United States Natural Gas Fund (NYSEArca: UNG), one of the most heavily traded natural gas exchange traded products, is up about 6% over the past week, but underscoring how poorly the commodity is performing 2017, UNG is still saddled with a year-to-date loss of more than 28%.
With that in mind, it might be logical to assume finding traders willing to endorse the flailing commodity is difficult, but some have recently turned bullish on natural gas.
“Bill Perkins of energy hedge fund Skylar Capital says the natural gas market could soon rev up,” reports CNBC. “With American exports of natural gas on the rise, while infrastructure ‘isn’t coming on fast enough,’ Perkins makes the point that ‘we actually have a very tight market now.’”
Futures-related natural gas exchange traded products are not the only natural gas securities that have been punished this year. With the energy sector ranking as the worst-performing group in the S&P 500 this year, the First Trust Natural Gas ETF (NYSEArca: FCG), which is comprised of natural gas exploration and production companies, is lower by 25%.
As its name implies, FCG has significant natural gas exposure, though many of its holdings increased oil output when crude prices were high. Still, natural gas prices are part of the equation with FCG.
“The commodity has recently jumped from $2.75 per million Btu to about $3 per million Btu. During the winter, Perkins expects natural gas prices to rise to $4,” according to CNBC. “Yet Perkins grants that weather, that famous driver of natural gas, could throw a wrench in that thesis.”
Earlier this year, the iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZB) debuted as an alternative to the iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ).
Related: Hotter Temps Don’t Always Heat Up Nat Gas ETFs
GAZB will try to reflect the performance of the same index as GAZ, Bloomberg Natural Gas Subindex Total Return Index, which tracks the potential returns through an unleveraged investment in natural gas futures contracts.
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.
For more information on the natgas market, visit our natural gas category.