of Tuesday’s commentary on the subject,” Izabella Kaminska Reports From FT Alphaville.
The Schork Report explains that the NYMEX contracts in particular could be experiencing a near-term bubble. Stephen Schork of the Schork Report Said “What we are seeing here is a technical bubble. For example, the underlying to the NYMEX contract at the Henry Hub lost 11 cents yesterday, while Transco Z6 inched up a penny to 3.16. Go that? NYMEX Henry Hub gas futures closed at 3.297 yesterday afternoon, while the physical gas for delivery into New York City traded around 14 cents lower yesterday morning. NYMEX gas is a bubble… but be careful, Lord Keynes has a point.”
“Here’s the twist. Concurrently, the market continues to be distorted by the ETF United States Natural Gas (UNG). Some believe that near term natural gas contracts are abnormally lower than long-dated futures due to the way (UNG) must adjust its positions. Shouldn’t this be keeping the near term (front month) contract lower rather than creating a NYMEX bubble as the Schork Report highlights,” Vincent Fernando Reports From Business Insider.
“While Olivier Jakob at Petromatrix, explains that (UNG) may have reduced its market activity recently, the entire situation appears pretty murky. Feel free to enlighten us, the near-term contracts seem to be horribly inefficient. Still, the longer-term mean reversion story (to higher prices) for natural gas remains in place,” Fernando 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. It is nondiversified.
Here is a look at some of our other recent Natural Gas ETF Stories below: