Advertisement
Canada markets open in 4 hours 23 minutes

  • S&P/TSX

    22,011.72
    +139.76 (+0.64%)
     

  • S&P 500

    5,070.55
    +59.95 (+1.20%)
     

  • DOW

    38,503.69
    +263.71 (+0.69%)
     

  • CAD/USD

    0.7311
    -0.0009 (-0.13%)
     

  • CRUDE OIL

    82.95
    -0.41 (-0.49%)
     

  • Bitcoin CAD

    90,859.92
    +240.63 (+0.27%)
     

  • CMC Crypto 200

    1,435.50
    +11.40 (+0.80%)
     

  • GOLD FUTURES

    2,331.90
    -10.20 (-0.44%)
     

  • RUSSELL 2000

    2,002.64
    +35.17 (+1.79%)
     

  • 10-Yr Bond

    4.5980
    -0.0250 (-0.54%)
     

  • NASDAQ futures

    17,691.75
    +85.00 (+0.48%)
     

  • VOLATILITY

    15.79
    +0.10 (+0.64%)
     

  • FTSE

    8,082.68
    +37.87 (+0.47%)
     

  • NIKKEI 225

    38,460.08
    +907.92 (+2.42%)
     

  • CAD/EUR

    0.6839
    +0.0003 (+0.04%)
     

Tap Soaring Natural Gas With These ETFs

Sweta Killa
·4 min read

Natural gas futures spiked to a fresh 13-year high on tight supply conditions, adverse weather conditions and declining inventories. With this, natural gas is up 65% so far this year.

Investors could easily tap the soaring natural gas price with ETFs that deal directly in the futures market. These are United States Natural Gas Fund UNG, United States 12 Month Natural Gas Fund UNL and iPath Bloomberg Natural Gas Subindex Total Return ETN GAZ.

The jump in prices came as the conflict between Russia and Ukraine has sparked fears of global supply disruption in an already tight-supply market. Western countries have slapped severe sanctions against Russia over Ukraine that has disrupted trade flows. Sanctions by the United States and other countries will force Russia to supply less natural gas, thereby pushing prices higher (read: 5 Commodity ETFs Enjoying Hot Streak in Q1).

Additionally, the weather is expected to be much colder than normal throughout the United States for the next two weeks. This would boost demand for natural gas to fuel heating at homes and business. Notably, about half of the U.S. households use natural gas as their primary source of heating. Per the latest report, U.S. consumption of natural gas increased across all major sectors by 15.0% last week compared with the previous report week. Natural gas consumption in the residential and commercial sectors was the most, rising by 39.2% as average daytime temperatures across the eastern United States were colder than normal.

A larger-than-expected withdrawal from storage inventories for the week ending Apr 1 also added to the strength. Further, soaring global gas prices are prompting buyers from around the world to continue purchasing all the liquefied natural gas that the United States is producing. An increase in LNG export demand will likely continue given the higher demand in Asia and Europe.

United States Natural Gas Fund (UNG)

United States Natural Gas Fund provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near month contract is within two weeks of expiration, the benchmark will be the next month contract to expire. The natural gas contract is natural gas delivered at the Henry Hub, LA.

United States Natural Gas Fund has AUM of $401.7 million and trades in volume of around 7.6 million shares per day. It has 1.35% in expense ratio and has soared 70% this year.

United States 12 Month Natural Gas Fund (UNL)

United States 12 Month Natural Gas Fund seeks to offer natural gas exposure without using a commodity futures account. The investment objective of UNL is to reflect the daily changes in the price of natural gas delivered at the Henry Hub Louisiana. 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 has accumulated $25 million in its asset base and charges 90 bps in annual fees. The product trades in a moderate average daily volume of 70,000 shares and has risen 65.8% this year.

iPath Bloomberg Natural Gas Subindex Total Return ETN (GAZ)

iPath Bloomberg Natural Gas Subindex Total Return ETN provides exposure to the Bloomberg Natural Gas Subindex Total Return, which consists of the contract in the Bloomberg Commodity Index Total Return that relates to natural gas (read: Best & Worst Performing ETFs of Q1).

iPath Bloomberg Natural Gas Subindex Total Return ETN is unpopular and illiquid with AUM of $22.3 million and an average daily volume of 30,000 shares. Expense ratio comes in at 0.45%. GAZ has soared 68.8% this year.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (GAZ): ETF Research Reports
 
United States 12 Month Natural Gas ETF (UNL): ETF Research Reports
 
United States Natural Gas ETF (UNG): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research