Oil continues to spill into the Gulf of Mexico as BP works to stem the flow from the uncapped well. While investors may have expected an increase in the prices for oil and Natural Gas when the news of the spill went nationwide in late April the prices moved in their own separate directions. In between late April and July 12th Natural Gas Prices for the September contract on the New York Mercantile Exchange improved slightly from $4.25 to $4.41 while the price of the August contract for crude oil fell from $90/barrel to $74.88/barrel.
Natural Gas Year in Review
Over the past 12 months ending July 12, 2010 the United States Natural Gas Fund (NYSE:UNG), LP, has fallen nearly 40%. In comparison the United States Oil Fund (NYSE:USO) has risen just over 6% while the S&P 500 improved over 22%. Investors have to look all of the way back to July 2008 in order to find Natural Gas futures contract prices stretching near $11. During the same July 2008 timeframe the United States Natural Gas Fund (NYSE: UNG) reached as high as $63.20 versus its closing price of $7.42.
Natural Gas still has the upside potential of being a more environmentally fuel source than crude oil. It also has the benefit of not being the darling of investor’s eyes at the moment. Everyone likes a winner, but most don’t want to be a part of the work it takes to get there. In this case it’s the discomfort associated with gas prices that have been moving steadily lower for approximately 2 years. It’s never in an investor’s interest to rush all into any investment at once. A method to approach the (NYSE:UNG) fund could be to pay attention to the amount of assets it has under management. When the number begins to swell it could be a notice of investor’s sentiment re-positioning to push (NYSE:UNG) higher. According to Morningstar the (NYSE:UNG) Fund has $2.7 billion assets as of July 12, 2010.
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. 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.
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.