natural gas

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SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
natural gas

On Financial Sense this weekend natural gas came up as a topic. It got me looking at UNG. It's really low right now, and although demand is down, I'm surprised UNG would be so low: ---- hmm-- tried to insert UNG and gas usage charts but I can't figure it out. Well, easy enough to find on your own ---

Anyway, anyone out there know much about trading natural gas?

 

 

elsinga's picture
elsinga
Status: Bronze Member (Offline)
Joined: Aug 8 2008
Posts: 34
Re: natural gas

Well, over here in Europe we use it a lot for heating our homes and cooking. Almost all homes in the Netherlands have a Natural Gas connection to the grid, those who don't (less than 1% in very rural area's) typically have their own Liquid Natural Gas tank they have filled every year.

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Re: natural gas

I'm not sure what the percent use is in the US. Propane is used extensively in the rural areas. Domestic heating use certainly explains the great yearly cycle in natural gas use. Even coming off winter use, it seems odd the UNG etf is priced so low.

BTW - your avatar looks like a BMW; R1200?  I've got it's grandfather - a '62 R69S.

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Re: natural gas
SteveS wrote:

On Financial Sense this weekend natural gas came up as a topic. It got me looking at UNG. It's really low right now, and although demand is down, I'm surprised UNG would be so low: ---- hmm-- tried to insert UNG and gas usage charts but I can't figure it out. Well, easy enough to find on your own ---

Anyway, anyone out there know much about trading natural gas?

 

 

Here is the UNG chart.

 

 

Ragnar_Danneskjold's picture
Ragnar_Danneskjold
Status: Silver Member (Offline)
Joined: Feb 23 2009
Posts: 100
Re: natural gas

Demand, supply, available storage, and weather play a big part in NG pricing.  Hurricane season is coming up, which can wreck havoc on infrastucture and prices.   But the forecast is low, so, that may not be much of a factor this year.  The producers are shutting down a lot of rigs and putting off prospecting for new gas though, so, supply will be drying up and prices will go up accordingly. 

A lot of big end users are nearly fully hedged for the next year, so, those volumes could get dumped back on the market if the economy doesn't improve and they shut down.  

I'd wait a month or so on UNG. 

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Re: natural gas
Ragnar_Danneskjold wrote:

Demand, supply, available storage, and weather play a big part in NG pricing.  Hurricane season is coming up, which can wreck havoc on infrastucture and prices.   But the forecast is low, so, that may not be much of a factor this year.  The producers are shutting down a lot of rigs and putting off prospecting for new gas though, so, supply will be drying up and prices will go up accordingly. 

A lot of big end users are nearly fully hedged for the next year, so, those volumes could get dumped back on the market if the economy doesn't improve and they shut down.  

I'd wait a month or so on UNG. 

Thanks for the analysis. I have a lot tied up in an IRA that I can't easily get at, but at least I can trade ETFs in it. Commodities seem like good bets, but I'm still learning. I did get some USO a month or so ago, and that seems like a good decision, so I'm trying to broaden my horizons. I will keep a close watch on this. I've been dragged kicking and screaming into underrstanding finacials, but you knwo, it's actually getting interesting....

elsinga's picture
elsinga
Status: Bronze Member (Offline)
Joined: Aug 8 2008
Posts: 34
Re: natural gas
SteveS wrote:

BTW - your avatar looks like a BMW; R1200?  I've got it's grandfather - a '62 R69S.

 

Quite offtopic, but I own a BMW R1100GS.

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