UNG Remains Around $15—Will It Recover?

The price of United States Natural Gas (UNG) ended the year with another tumble as it dipped below $15 at one point. Currently, the price is around $15 – the lowest level UNG reached in the past couple of years. The high uncertainty around the weather forecasts for January didn’t stop investors to pull out of UNG. The hotter than normal weather and slow rise in production maintain UNG at its current low level. Keep in mind, however, the natural gas storage is still low for the season and is likely to remain low by the end of March.

Storage extractions remain slow

The last few storage reports showed that the extractions were very low for this time of the year. We could start seeing a trend developing in recent weeks.

As you can see, the slope in storage this winter seems less steep than in previous winters. This could indicate that the natural gas market doesn’t heat up as it did last winter.

The natural gas futures markets also show a trend — the once high Backwardation for the four month contracts recorded at the end of November has almost entirely dissipated. Currently, the future markets are mostly still in Backwardation, however, the gaps are very small.

The rest of this analysis is at Seeking Alpha

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