The Natural Gas ETF (UNG) Surges Although The Outlook Is Still Bearish

Natural-gas futures shot more than 6% higher after a U.S. government report showed natural gas inventories grew by a slightly smaller-than-expected amount last week. The reported increase, although only slightly smaller than expected, encouraged traders that were betting on falling prices to buy back contracts after weeks of steep price declines amid fading winter weather and a weaker demand outlook,” Jason Womack Reports From The WSJ.

The Natural Gas ETF (UNG) shot up 6% on the data and is giving investors relief from the beating the fund has taken.  The bullish day for the ETF may be short-lived as the outlook for Natural Gas is still very weak.

“Natural gas in U.S. storage for the week ended March 26 stands at 1.638 trillion cubic feet—1% lower than a year ago and 10.8% higher than the five year average. On average, 27 bcf were withdrawn from storage during the same week over the past five years,” Womack Reports.

“This still would seem to reinforce the dominant bearish sentiment, especially given the likelihood of further bearish reports off the mild temperatures in northern heating markets we’re seeing,” Tim Evans, an analyst with Citi Futures Perspective, wrote in a note to clients.

“There’s not much to say for a fund for which so much has already been said. Abundant natural gas supplies have held prices low and hopeful investors were crushed once again by reality. (UNG) saw new all-time lows in the quarter and while it will certainly be the case at some point, there is no sign on the horizon that suggests the string of new lows will be broken in the second quarter,” Don Dion Reports From The Street.

Here are some details on the Natural Gas ETF (UNG) below:

The investment 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.

Company Symbol % Assets
Fidelity Instl MM Fds Government I N/A 18.04
Goldman Sachs FS Government Sel N/A 17.14
Future Contract On Natural Gas Futr Apr10 Ice N/A 12.39
Morgan Stanley Inst Liquidity Gov Inst N/A 8.79
Usng Comm Swap 2/26/10 Long N/A 7.56
Future Contract On Natural Gas Futr Apr10 N/A 7.09
Usng Comm Swap 5/28/10 Long N/A 7.08
Newedge Trs 1a Long N/A 3.53
Jpm Trs 2 Long N/A 3.27
Jpm Trs 1 Long N/A 3.26

Chart for United States Natural Gas (UNG)

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