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Natural gas prices have been on the rise this year as cold weather gripped large parts of the United States. The severe weather conditions have not only led to higher demand but also reduced supplies, driving natural gas prices higher.
To tap this trend, investors could bet on natural gas ETFs that deal directly in the futures market. These are United States Natural Gas Fund (UNG - Free Report) , United States 12 Month Natural Gas Fund (UNL - Free Report) and ProShares Ultra Bloomberg Natural Gas (BOIL - Free Report) . UNG, UNL and BOIL have gained 14%, 5.3% and 9.5%, respectively, in the initial weeks of 2024 and still have room for growth.
Freezing temperatures in several U.S. regions have spurred the need for heating in homes and offices, pushing the demand to a record high. U.S. gas demand reached a preliminary 167.8 billion cubic feet per day (Bcf/d) on Jan 16, surpassing the previous all-time high of 162.5 Bcf/d set in December 2022 during Winter Storm Elliott (read: 4 ETF Zones Beating the Market to Start 2024).
This extreme cold has reduced natural gas output to a near 13-month low due to freezing wells. The severe winter storm blanketed a vast area with snow, resulting in the closure of a refinery along the Texas Gulf Coast, prompting operational issues at other facilities, and causing a significant reduction, by half, of North Dakota's oil output.
Given the continued demand for heating in this cold weather, the solid trend in the natural gas market is likely to continue, at least in the near term.
United States Natural Gas Fund tracks the daily changes in the price of natural gas delivered at the Henry Hub, LA. If the near-month contract is within two weeks of expiration, the benchmark will be the next month contract to expire. United States Natural Gas Fund has an AUM of $931.7 million and trades in a volume of around 24 million shares per day. UNG has an expense ratio of 1.06% (read: 5 Best ETF Areas of Last Week).
United States 12 Month Natural Gas Fund (UNL - Free Report)
United States 12 Month Natural Gas Fund seeks to replicate the performance of natural gas through portfolios of futures contracts. The investment objective of UNL is to reflect the daily changes in the price of natural gas delivered at the Henry Hub. Its benchmark is the near-month futures contract to expire and the contracts for the following 11 months, for a total of 12 consecutive months. If the near-month futures contract is within two weeks of expiration, the benchmark will be the next-month contract to expire and the contracts for the following 11 consecutive months.
United States 12 Month Natural Gas Fund accumulated $16.2 million in its asset base and charges 90 bps as annual fees. The product trades in a moderate average daily volume of 46,000 shares.
For investors seeking to play on the natural gas spike for outsized profits in a short span, a leveraged bet might be a way to go. ProShares Ultra Bloomberg Natural Gas offers two times (2X) the daily performance of the Bloomberg Natural Gas Subindex. It charges 95 bps in annual fees and has amassed $753 million in its asset base. BOIL trades in average daily volume of 7 million shares.
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Cold Snap Pushes Natural Gas ETFs Higher
Natural gas prices have been on the rise this year as cold weather gripped large parts of the United States. The severe weather conditions have not only led to higher demand but also reduced supplies, driving natural gas prices higher.
To tap this trend, investors could bet on natural gas ETFs that deal directly in the futures market. These are United States Natural Gas Fund (UNG - Free Report) , United States 12 Month Natural Gas Fund (UNL - Free Report) and ProShares Ultra Bloomberg Natural Gas (BOIL - Free Report) . UNG, UNL and BOIL have gained 14%, 5.3% and 9.5%, respectively, in the initial weeks of 2024 and still have room for growth.
Freezing temperatures in several U.S. regions have spurred the need for heating in homes and offices, pushing the demand to a record high. U.S. gas demand reached a preliminary 167.8 billion cubic feet per day (Bcf/d) on Jan 16, surpassing the previous all-time high of 162.5 Bcf/d set in December 2022 during Winter Storm Elliott (read: 4 ETF Zones Beating the Market to Start 2024).
This extreme cold has reduced natural gas output to a near 13-month low due to freezing wells. The severe winter storm blanketed a vast area with snow, resulting in the closure of a refinery along the Texas Gulf Coast, prompting operational issues at other facilities, and causing a significant reduction, by half, of North Dakota's oil output.
Given the continued demand for heating in this cold weather, the solid trend in the natural gas market is likely to continue, at least in the near term.
United States Natural Gas Fund (UNG - Free Report)
United States Natural Gas Fund tracks the daily changes in the price of natural gas delivered at the Henry Hub, LA. If the near-month contract is within two weeks of expiration, the benchmark will be the next month contract to expire. United States Natural Gas Fund has an AUM of $931.7 million and trades in a volume of around 24 million shares per day. UNG has an expense ratio of 1.06% (read: 5 Best ETF Areas of Last Week).
United States 12 Month Natural Gas Fund (UNL - Free Report)
United States 12 Month Natural Gas Fund seeks to replicate the performance of natural gas through portfolios of futures contracts. The investment objective of UNL is to reflect the daily changes in the price of natural gas delivered at the Henry Hub. Its benchmark is the near-month futures contract to expire and the contracts for the following 11 months, for a total of 12 consecutive months. If the near-month futures contract is within two weeks of expiration, the benchmark will be the next-month contract to expire and the contracts for the following 11 consecutive months.
United States 12 Month Natural Gas Fund accumulated $16.2 million in its asset base and charges 90 bps as annual fees. The product trades in a moderate average daily volume of 46,000 shares.
ProShares Ultra Bloomberg Natural Gas (BOIL - Free Report)
For investors seeking to play on the natural gas spike for outsized profits in a short span, a leveraged bet might be a way to go. ProShares Ultra Bloomberg Natural Gas offers two times (2X) the daily performance of the Bloomberg Natural Gas Subindex. It charges 95 bps in annual fees and has amassed $753 million in its asset base. BOIL trades in average daily volume of 7 million shares.