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Polar Blast Warms Up Natural Gas ETFs: Will the Rally Continue?
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An arctic cold snap swept the United States just as Christmas approached. Snow and ice have draped much of the United States and Canada. Icy winds paralyzed civilization ahead of the holiday weekend. This week, the hauling winds may slow down while temperatures are expected to fluctuate between single digits and the mid-20s, according to the National Weather Service forecast.
The government cautioned of wind chills of 20 to 25 degrees below zero. Moreover, “the cold wind chills could cause frostbite on exposed skin in as little as 30 minutes,” according to the news release. About two-thirds of the country — will see extreme inclement weather, said Ryan Maue, a private meteorologist in the Atlanta area, as quoted on voanews.com. Against this backdrop, natural gas ETFs are good bets.
Natural Gas
Natural gas prices should bask in the glow of winter chills. Normally, Arctic Chills give life to this commodity every winter. The cold snap boosts electricity demand across the region, putting natural gas in focus. Since almost 50% of Americans use natural gas for heating purposes, withdrawal in natural gas supplies pushes up the commodity’s prices.
Extreme cold this week increased spot power and gas prices to their highest in years across much of the country and cut gas production to a nine-month low by freezing oil and gas wells in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere, as quoted on investing.com.
Extreme cold normally curbs natural gas production and demand for heating surges as people seek to stay warm. An ETF tracking natural gas futures, namely United States Natural Gas Fund (UNG - Free Report) should benefit.
UNG in Focus
The Natural Gas Price Index is the futures contract on natural gas as traded on the NYMEX. The United States Natural Gas ETF LP is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. The expense ratio of UNG is 1.11%.
First Trust Natural Gas ETF (FCG - Free Report) in Focus
The underlying ISE-Revere Natural Gas Index is an equal-weighted index comprising exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas. The fund charges 60 bps in fees and yields 3.00% annually.
Will the Rally Continue?
Gas demand jumped globally after Russia cut off Europe's primary supply. And the United States and Canada are expected to contribute to huge demand for exports in coming years, thanks to high prices. The two countries produced a record combined 116 billion cubic feet per day (bcfd) in 2022.
Traders said the biggest doubt for the market remains when Freeport LNG will restart its LNG export plant in Texas. Small amounts of gas started to flow to Freeport for the first time since August and continued to flow on Wednesday, according to data provider Refinitiv, per investing.com. In short, there is hope for a rally in the natural gas market while the market could stay suppressed over the long term.
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Polar Blast Warms Up Natural Gas ETFs: Will the Rally Continue?
An arctic cold snap swept the United States just as Christmas approached. Snow and ice have draped much of the United States and Canada. Icy winds paralyzed civilization ahead of the holiday weekend. This week, the hauling winds may slow down while temperatures are expected to fluctuate between single digits and the mid-20s, according to the National Weather Service forecast.
The government cautioned of wind chills of 20 to 25 degrees below zero. Moreover, “the cold wind chills could cause frostbite on exposed skin in as little as 30 minutes,” according to the news release. About two-thirds of the country — will see extreme inclement weather, said Ryan Maue, a private meteorologist in the Atlanta area, as quoted on voanews.com. Against this backdrop, natural gas ETFs are good bets.
Natural Gas
Natural gas prices should bask in the glow of winter chills. Normally, Arctic Chills give life to this commodity every winter. The cold snap boosts electricity demand across the region, putting natural gas in focus. Since almost 50% of Americans use natural gas for heating purposes, withdrawal in natural gas supplies pushes up the commodity’s prices.
Extreme cold this week increased spot power and gas prices to their highest in years across much of the country and cut gas production to a nine-month low by freezing oil and gas wells in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere, as quoted on investing.com.
Extreme cold normally curbs natural gas production and demand for heating surges as people seek to stay warm. An ETF tracking natural gas futures, namely United States Natural Gas Fund (UNG - Free Report) should benefit.
UNG in Focus
The Natural Gas Price Index is the futures contract on natural gas as traded on the NYMEX. The United States Natural Gas ETF LP is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. The expense ratio of UNG is 1.11%.
First Trust Natural Gas ETF (FCG - Free Report) in Focus
The underlying ISE-Revere Natural Gas Index is an equal-weighted index comprising exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas. The fund charges 60 bps in fees and yields 3.00% annually.
Will the Rally Continue?
Gas demand jumped globally after Russia cut off Europe's primary supply. And the United States and Canada are expected to contribute to huge demand for exports in coming years, thanks to high prices. The two countries produced a record combined 116 billion cubic feet per day (bcfd) in 2022.
Traders said the biggest doubt for the market remains when Freeport LNG will restart its LNG export plant in Texas. Small amounts of gas started to flow to Freeport for the first time since August and continued to flow on Wednesday, according to data provider Refinitiv, per investing.com. In short, there is hope for a rally in the natural gas market while the market could stay suppressed over the long term.