The natural gas market cooled down as the natural gas ETF United States Natural Gas (UNG) plunged by 12.5% since the beginning of the month. The oil market also loosened up as crude oil prices tumbled down by 11% during October. Are these two events related? What is keeping UNG down?
Despite the recent fall in natural gas prices, the futures market is still in Contango, as indicated in the chart below.
The smaller gaps among the long term future contracts and short term suggest the roll decay in UNG could come down in the near term.
Oil and natural gas
Even though oil and natural gas tend to have a relation, the recent tumble in the price of crude oil, at face value, there was no linear correlation between natural gas and crude oil – over the past month, the correlation of the daily percent changes between the two was -0.013, which is very weak and not significant.
The rest of this analysis is at Seeking Alpha