Cold Weather Projections Drive UNG Higher

United States Natural Gas (UNG) rose by 13% since the beginning of the month as the expectations for a rise in demand in natural gas for heating are growing. What is next for UNG?

The chart below shows the progress of UNG and the price of natural gas, in which both are normalized to the end of September. As you can see, the recent rally in UNG and natural gas also led to an expansion in the gap between the two so that the Contango in the future markets keeps UNG to under-perform natural gas.

The recent storage build was higher than expected: Last week’s injection was 91 Bcf, which was well above the 5-year average injection and last year’s storage build. The chart below presents the changes between this year’s injections and the5-year average injection and the percent changes in the price of natural gas on the day of the release of the natural gas storage report.

The rest of this analysis is at Seeking Alpha

For more see: