“Natural gas futures shot 6% higher Thursday, propelled by a U.S. government report that showed a smaller-than-expected build in natural gas inventories and expectations for hot weather in the coming weeks. Natural gas for July delivery on the New York Mercantile Exchange settled 26.6 cents, or 6.01%, higher at $4.69 a million British thermal units–the highest settlement price since March 3. The front-month contract jumped as high as $4.703/MMBtu earlier in the session. Prices received a lift after the U.S. Energy Information Administration reported that natural gas inventories grew by 88 billion cubic feet last week, falling short of consensus estimates for a build of 93 billion cubic feet,” Jason Womack Reports From Dow Jones Newswires.

“There is potentially a tighter supply and demand balance than some people had modeled,” said Cameron Horwitz, an analyst with SunTrust Robinson Humphrey in Houston, noting that the weather outlook was providing additional support for prices.

Womack goes on to say, “Natural gas futures have trended higher over the last week as traders, who had bet on falling prices bought back previously sold contracts on expectations for hot summer weather that can ratchet up gas demand and for a busy hurricane season, which can potentially disrupt supplies from the energy-rich U.S. Gulf of Mexico. Forecasters at Colorado State University said on Wednesday that the 2010 Atlantic hurricane season will be extremely active, featuring five intense hurricanes–twice the 50-year average.”

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“Meteorologists with the private forecasting firm MDA EarthSat weather are also predicting above-normal temperatures across the eastern half of the country from June 13-17. Those warmer-than-normal temperatures can help spur natural gas demand to generate electricity for air conditioning and help draw down high levels of natural gas in storage,” Womack Reports.

As a result of the report the U.S. Natural Gas ETF (NYSE:UNG) closed up 6.09% in trading Thursday, tacking on more gains following its 4.9% rally the previous day as the  ETF broke $8 a share. The ETF, which invests in natural-gas futures rose to its highest level since March. It is down about 21% year to date.

Traders Huddle also reports that, “The United States Natural Gas Fund (NYSE: UNG) has been the favorite short for multiple traders during the last year, where every single rally was shorted, as the UNG continuously made lower lows stuck in contango with the ETF selling the front month at a loss as it rolled over to buy contracts on the next month. For the past couple of months the dynamic started changing as the UNG actually started to sideways trade for some time setting up a base range from $6.50 area to $7.50 on the high side. Yesterday the UNG actually broke the 50 day moving average closing at the highs.”

“That setup for a breakout trade today, as traders are starting to get long instead of being short. It will probably spark some short covering in the sector that will prompt the UNG to establish a new trading range as it broke its major downtrend. Today’s price action so far is good for a close well above the 50 day moving average and it’s doing it with decent volume, so something to keep on the long radar for the time being,”  Traders Huddle Reports.

In another sign that investors have turned bullish on the Natural Gas ETF (NYSE:UNG) Market Intellisearch reports that, “UNG options saw interesting call activity today. A total of 48,589 put and 172,765 call contracts were traded raising a low Put/Call volume alert. Today’s traded Put/Call ratio is 0.28. There were 3.56 calls traded for each put contract. A significant increase in the trading volume of a stock’s option often is a precursor of movement by the underlying stock. In such instances, Put/Call Ratio can be used as an investor sentiment indicator, where a high ratio implies that the overall investor sentiment is bearish and a low Put/Call ratio implies that the overall sentiment is bullish.”

We have put together some more details on the U.S. Natural Gas ETF (NYSE:UNG) below including a snapshot of the options activity reported in the article. You can also visit our U.S. Natural Gas ETF (NYSE:UNG) category for more insight.

United States Natural Gas Fund (NYSE:UNG)           

The United States Natural Gas Fund, LP (NYSE:UNG) is a new way for investors and hedgers to manage their exposure to energy. The United States Natural Gas Fund LP (NYSE: UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues units that may be purchased and sold on the NYSE Arca. The investment objective of UNG is for the changes in percentage terms of the units’ net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire, less UNG’s expenses.  

Call Options

Expire at close Friday, June 18, 2010

Strike Symbol Last Chg Bid Ask Vol Open Int 3.00 UNG100619C00003000 4.50 0.10 4.95 5.05 3 6 4.00 UNG100619C00004000 3.40 0.00 3.95 4.05 0 304 5.00 UNG100619C00005000 2.95 0.45 2.98 3.05 35 396 6.00 UNG100619C00006000 1.99 0.45 2.01 2.03 2,042 3,427 7.00 UNG100619C00007000 1.03 0.39 1.03 1.05 5,272 37,809 8.00 UNG100619C00008000 0.30 0.17 0.29 0.30 49,443 68,995 9.00 UNG100619C00009000 0.05 0.03 0.04 0.05 5,899 7,621 10.00 UNG100619C00010000 0.01 0.00 N/A 0.01 1,633 4,637 11.00 UNG100619C00011000 0.01 0.00 N/A 0.01 0 1,048 12.00 UNG100619C00012000 0.01 0.00 N/A 0.01 0 59

Put Options

Expire at close Friday, June 18, 2010

Strike Symbol Last Chg Bid Ask Vol Open Int 4.00 UNG100619P00004000 0.02 0.00 N/A 0.01 0 231 5.00 UNG100619P00005000 0.02 0.00 N/A 0.01 0 1,839 6.00 UNG100619P00006000 0.01 0.01 N/A 0.01 68 12,198 7.00 UNG100619P00007000 0.04 0.06 0.03 0.04 7,301 25,902 8.00 UNG100619P00008000 0.29 0.30 0.29 0.29 12,194 12,798 9.00 UNG100619P00009000 1.05 0.43 1.04 1.05 3,307 1,219 10.00 UNG100619P00010000 2.03 0.72 1.98 2.02 679 272 11.00 UNG100619P00011000 3.10 0.70 2.98 3.05 60 11 12.00 UNG100619P00012000 4.80 0.00 3.95 4.05 0 1

ETFs offer an easy way to play Natural Gas and there are many options available besides the most popular US Natural Gas ETF (NYSE:UNG).  We have listed some other options for investors to look at and compare to one another below.  Note that we have listed some industry related ETFs as well as direct Natural Gas exposure plays excluding any leveraged ETFs.                  

United States 12 Month Natural Gas (NYSE:UNL)           

The investment seeks to reflect the changes, net of expenses, of the spot price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the average of the prices of 12 futures contracts on natural gas traded on the NYMEX. The fund will consist of the near month contact to expire and the contracts for the following eleven months, for a total of 12 consecutive months contracts, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire and the contracts for the following eleven consecutive months.           

iPath DJ-UBS Natural Gas TR Sub-Idx ETN (NYSE:GAZ)           

The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones-UBS Natural Gas Total Return Sub-Index. The note is designed to reflect the performance of natural gas. The index is composed of the Henry Hub Natural Gas futures contract traded on the New York Mercantile Exchange.           

First Trust ISE-Revere Natural Gas Idx (NYSE:FCG)           

The investment seeks to replicate, net of expenses, the ISE-REVERE Natural Gas index. The fund invests at least 90% of assets in common stocks that comprise the index. The index is an equal-weighted index that consists of exchange-listed companies that derive a substantial portion of their revenue from the exploration and production of natural gas. The fund is nondiversified.           

iShares Dow Jones US Oil Equipment Index (NYSE:IEZ)           

The investment seeks results that correspond generally to the price and yield performance of the Dow Jones U.S. Select Oil Equipment & Services index. The fund generally invests at least 90% of assets in securities of the Underlying index and depositary receipts representing securities of the Underlying index. It may invest the remainder of assets in securities not included in the Underlying index but which BGFA believes will help the fund track Underlying index, and in futures contracts, options on futures contracts, options and swaps as well as cash and cash equivalents, including shares of money market funds advised by BGFA. It is nondiversified.           

Jefferies | TR/J CRB Wildcatters Exploration & Production Equity ETF (NYSE:WCAT)           

The investment seeks investment results that replicate as closely as possible, before fees and expenses, the price and yield performance of the Thomson Reuters/Jefferies CRB Wildcatters Energy E&P Equity index. The fund normally invests at least 80% of total assets in the equity securities that comprise the underlying index and depositary receipts based on the securities in index. The index is designed to track the overall performance of a universe of listed U.S. and Canadian small and mid-capitalization companies engaged in the exploration and production of oil and natural gas. The fund is nondiversified.

IEZ, NYSE:FCG, NYSE:GAZ, UNG, UNL, WCAT