The ETF has been taking a beating and is at 52 week lows as Natural Gas has remained low. Though, one thing to consider is “If there are more buyers than sellers (and interest has been strong), shares are likely to trade at a premium even if the price of natural gas declines — something the fundamentals and technicals would imply,” Don Dion from The Street reports.
“Even though the fund is a huge portion of the futures market, it is not a large portion of the overall natural gas market. As of last week, inventory was 20% above the five-year average, according to the Energy Information Administration. Natural gas consumption is split almost evenly across industrial, residential and commercial and electric power demand. Meanwhile, 70% of petroleum flows to the transportation sector of the economy,” Dion Reports.
The investment UNG seeks to replicate the performance, net of expenses, of natural gas. The trust will invest in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire.
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