These two ideas are a bet on a better year for natural gas—whether you are a conservative or aggressive trader.
U.S. Natural Gas ETF (UNG)—for conservative traders and/or Velocity Shares 3X Long Nat Gas ETN (UGAZ)—for more aggressive traders
From The National Investor
Though natural gas inventory levels are not bad (indeed, several % below last year’s), a La Nina-influenced punk start to the heating season (it was in the 50’s way up North where my family lives for Thanksgiving!) and the very bearish influence of rising U.S. oil production have kept nat gas weighed down.
But my sense is that we are putting in yet another higher lower for natural gas. I remain very skeptical over oil’s rise too, as of Friday—near $59/barrel. At the least—and for myriad reasons—I think we’ll see some consolidation. That would help nat gas’ fundamentals, as it is the rapid increase in U.S. oil production that has brought added gas to market and is a weight on prices.
Also, longer-range forecasts into next week are showing a return to more seasonable (or lower) temperatures over almost all the U.S. Even here in America’s oldest city, we’re only supposed to have highs of barely 60 by sometime next week.
Last but not least—and a wild card I’m looking at a bit more—it seems like a much stronger global price for gas again may serve to support or even pull up U.S. pricing. All together I think the downside risk is slight with nat gas below $3.00/mcf, even after firming up a bit early this morning.
So, depending on your risk tolerance you can go with the less volatile UNG or the more dynamic/leveraged UGAZ.
Chris Temple, The National Investor, www.nationalinvestor.com, 224-308-2587, November 27, 2017