“Natural gas prices are headed south once again and the U.S. Natural Gas ETF (NYSE:UNG) is leading the downward spiral. One, though, shouldn’t give up on the natural gas sector just yet. Natural gas prices bottomed out a few months ago before starting a small rally in late May. A slow and steady economic recovery helped support the hopes that natural gas prices could finally be ready to turn higher. From bottom to top, the move was impressive, amounting to upwards of 25% gains for (NYSE:UNG). But the rally topped out in June, and prices are now heading back towards the 2010 low. Thus far, hurricane season has been mild, while inventories remain well stocked. Over the past 16 months, inventory levels have been at the top of the 5-year range nearly the entire time,” Don Dion Reports From Dion Money Management.

Dion goes on to say, “As (NYSE:UNG) and natural gas prices advanced, it lifted natural gas stocks and the First Trust ISE-Revere Natural Gas ETF (NYSE:FCG) , since the move in natural gas prices occurred during a respite in the correction. From May 24 to June 15, (NYSE:UNG) gained 26.5% while (NYSE:FCG) gained 16.7%, beating the SPDR S&P 500 ’s (NYSE:SPY) return of 4%. That outperformance transitioned into underperformance once natural gas prices and stock prices dipped. (NYSE:SPY) gained just over 1% between June 15 and August 9, but (NYSE:FCG) lost nearly 8% as (NYSE:UNG) plummeted 17%. Over the past year, (NYSE:FCG) has kept pace with (NYSE:SPY) as the rebound in stocks offset the drag of lower natural gas prices. Occasional rallies in (NYSE:UNG) have lifted (NYSE:FCG), as we saw in June, but the eventual slide has always brought (NYSE:FCG) back to Earth. Looking forward, there’s no reason this has to end soon, but eventually it will.”

“For now, the MLPs have the momentum. With healthy yields and steady price appreciation, these companies are benefiting from the low-yield environment while avoiding harm associated with the low price of natural gas. Looking at the long-term development of the industry, the building of natural gas infrastructure is not a make-work stimulus project spending federal dollars. It is the private capital of energy companies that anticipate increased demand for natural gas. Low prices alone will eventually lead to greater demand by business and consumers, with or without any help from the government. Should the government make it easier to switch to natural gas fuels for transportation, for example, demand will increase even more. Eventually, that increase in demand will push prices up, and with it, the shares of companies involved in the exploration and production of natural gas because right now, these firms are priced based on the low price of natural gas. When the stock market or natural gas prices drag an ETF such as FCG downward, long-term investors should take the opportunity to pick up shares,” Dion Reports.

U.S. Natural Gas ETF (NYSE:UNG): Visit Our (UNG) Category: HERE

First Trust ISE-Revere Natural Gas ETF (NYSE:FCG): Visit Our (FCG) Category: HERE

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1. Beyond The U.S. Natural Gas Fund: 3 Intruiging ETFs To Play Natural Gas (GASZ, UNG, GAZ, NAGS, CHK, DVN)
2. Natural Gas Prices: Why It’s Time To Load Up On Natural Gas (UNG, FCG, DVN, CHK, GAZ)
3. ProShares Debuts Geared Natural Gas ETFs (UNG, FCG, GAZ, UNL, GASZ)
4. NG Storage Report & Hurricane Irene Put Natural Gas ETFs In Focus (UNG)
5. ProShares Launches First Geared Natural Gas Futures ETFs (BOIL, KOLD)

NYSE:FCG, UNG