Natural gas prices changed direction and rallied by 3.8% during last week. Moreover, United States Natural Gas (UNG) also rose by 3%. Will UNG and natural gas keep recovering?
In the meantime, the ongoing increase in Contango in the natural gas futures market could impede the progress of UNG compared to natural gas. For September, up to date, the price of natural gas is still down by 2%, while UNG is down by 3%. The chart below shows the changes in the normalized prices of natural gas and UNG. So even if natural gas were to keep recovering, the rise in the Contango may result in UNG underperforming natural gas.
Storage picked up by 97 Bcf
Based on the recent EIA weekly update, the storage rose by 97 Bcf; the underground natural gas storage increased to 2,988 Bcf – nearly 11.4% lower than last year’s levels. This recent injection was 18 Bcf higher than the 5-year average injection and 10 Bcf above last year’s.
Even though the injection to storage was slightly higher than last year, it may not be enough to bring the storage to its normal levels by November. The changes in the demand and supply impact the progress in the injection to storage.
The rest of this analysis is at Seeking Alpha