United States Natural Gas (UNG) changed direction and tumbled down by 7% in the past week. This comes after the natural gas ETF spiked by 13% a week earlier. Will this seesaw movement continue for UNG? Let’s start with the latest changes in the future markets and their impact on UNG.
In the past few weeks there has also been a change in the futures markets of natural gas, as indicated in the chart below.
This chart shows the gap among first month future contracts and 2, 3, and 4 months contracts. In the past few weeks the Contango has contracted. Also, the 4 month contracts have fallen below next month’s contract, which could suggest, at face value, the market expects prices in four months time from now (around March). This makes sense considering it will be around the time winter ends. A lower contango may also help UNG investors as it could reduce the roll decay of the ETF.
The rest of this analysis is at Seeking Alpha
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