Yahoo Finance Natural Gas Prices Outperform the United States Natural Gas Fund
Natural Gas Futures Are More Profitable than UNG This Year
United States Natural Gas Fund
The United States Natural Gas Fund ETF (UNG) declined by 2.33% and closed at $13.82 on May 26, 2015. UNG tracks the performance of natural gas futures contracts. It has assets worth $650 million. UNG has an average monthly volume of 5.5 million. It’s the largest natural gas ETF. UNG has an expense ratio of 0.60%.
UNG rollover
Currently, natural gas futures are having a contango market. This means futures contracts are trading higher than spot natural gas prices. The natural gas futures spread for June and July is at $0.027 as of May 26, 2015. The June natural gas futures expire on May 27, 2015. As a result, during the rollover, UNG has to purchase expensive near month futures contracts. This impacts its performance. So, UNG lags in performance with respect to its benchmark natural gas. As a result, UNG lost 6.43% YTD (year-to-date), while natural gas prices dropped to 2.11% YTD.
EIA stockpile report
Last week, the EIA (U.S. Energy Information Administration) reported that the weekly stockpile rose by 92 Bcf (billion cubic feet) to 1,989 Bcf in the week ending May 15, 2015. The next stockpile report will release on May 28, 2015. Bloomberg estimates show that inventories will rise by 110 Bcf for the week ending May 22, 2015. The estimates of increasing stockpile will put pressure on natural gas prices. EIA sources say that production from the Marcellus Shale region will increase by 14% in June 2015—compared to last year. The rise in production will also add pressure to natural gas prices.
Energy stocks’—like WPX Energy (WPX), Memorial Resource Development (MRD), and Anadarko Petroleum (APC)—revenue is affected by declining natural gas prices. These upstream stocks have a natural gas production mix that’s more than 45% of their production portfolio. They account for 3.43% of the Spider Oil and Gas ETF (XOP).
Oil and gas ETFs like the Energy Select Sector SPDR ETF (XLE) and XOP also fell in the direction of natural gas prices in yesterday’s trade.
Browse this series on Market Realist:
