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The Bull Market In Natural Gas ETFs Might Already Be Over

One of the most volatile segments of the market in the past week or so is in the Natural Gas space, where we see the largest Natural Gas tracking ETP, UNG (U.S. Natural Gas Fund, Expense Ratio 0.60%, $532 million in AUM) falling like a rock to current levels.

The product is trading at approximately $7.82 today, and fell below its 200 day MA for the first time since last November. UNG traded above $9.60 just eight trading sessions ago, presumably on colder weather forecasts for parts of the U.S. such as the Northeast, but it has quickly cratered to current levels on headlines of higher Natural Gas supply in the new-year and on potential softer EPA policy under a new U.S. Presidential administration.


As we mentioned in our ETF Fund Flows recap, we have seen some profit-taking in Bearish linked DGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%, $255 million in AUM) into this recent sudden sell-off in Natural Gas prices. The Natural Gas ETPs in terms of assets under management are not huge, and considering the trading volatility in the space especially lately, we would expect more interest from portfolio managers as well as short-term directional traders alike here.

UNG is the largest fund in the space with its $532 million in AUM, followed by a sister fund to DGAZ, UGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%, $320 million in AUM). Following DGAZ, which is the third largest fund in this space, there is a rather steep drop-off in terms of fund asset sizes with BOIL (ProShares Ultra Bloomberg Natural Gas, Expense Ratio 0.95%, $43 million in AUM) coming in next.

The United States Natural Gas Fund, LP (NYSE:UNG) was trading at $7.79 per share on Monday morning, down $0.38 (-4.65%). Year-to-date, UNG has declined -16.60%, versus a 1.47% rise in the benchmark S&P 500 index during the same period.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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