Natural Gas Inventories Surge – Here’s How to Trade It

July 15, 2016 7:04am NYSE:DGAZ NYSE:UGAZ

naturalgas600X300Yesterday’s natural gas report included a huge inventory build-up. Here are three ways investors and traders can play the natural gas markets using ETFs.


Highlights from the Report

  • Natural gas in storage rose 64 billion cubic feet in the July 8 week to 3,243 bcf.
  • Natural gas stocks are currently 22.1 percent above the 5-year average for this time of year
  • Natural gas stocks are above the maximum of the 5-year historical range.
  • Year-over-year, natural gas stocks are up 18.5%, well down from the 60% March levels.

How to Trade Natural Gas Right Now

Traders essentially have three ways to trade natural gas using ETFs, rather than dealing with complicated futures accounts.

1. United States Natural Gas Fund, LP (NYSE:UNG) – This is the largest natural gas ETF, and its price moves are roughly equivalent to changes in the spot price of natural gas. UNG is down about 6.5% year-to-date, and a whopping 39% over the past twelve months. UNG lost another $0.07 (-0.86%) in premarket trading Friday to $8.03 per share.

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2. VelocityShares 3X Long Natural Gas ETN (NYSE:UGAZ) – This triple leveraged natural gas ETF offers returns of 3x the move in natural gas prices. A favorite of day traders who are bullish on natural gas, UGAZ is down 39% year-to-date, and down 85% over the past twelve months. UGAZ fell another $0.93 (-2.50%) in premarket trading Friday to $36.25.

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3. VelocityShares 3X Inverse Natural Gas ETN (NYSE:DGAZ) – This triple leveraged inverse natural gas ETF offers inverse returns of 3x the move in natural gas prices. Traders looking to short natural gas prices love to buy this name. DGAZ has plunged 36% year-to-date, but is up 32% over the past twelve months. DGAZ rose $0.18 (+2.27%) in premarket trading Friday to $8.10.

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