Due to colder weather in the United States, the exchange traded fund for natural gas, United States Natural Gas (NYSE: UNG), is up more than 4.5% over the last week of trading (chart below).
That trend should continue as the winter months set in across the world.
In the United States, almost half of the homes are now heated by natural gas. More and more utilities are now using natural gas as it is preferable to coal. That has happened due to it being cheaper and cleaner. As a result of that and other factors, the exchange traded fund for coal, Market Vectors Coal (NYSE: KOL), is down more than 20% for 2013.
A report from the United States Energy Information Agency predicted that global energy usage will be soaring. Much of that will be from natural gas, especially in North America. Cheaper natural gas is a huge competitive advantage for American companies that use a great deal of energy, such as steel companies like Nucor (NYSE: NUE).
Due to fracking, natural gas will become more attractive. The usage of it will increase. It is also much easier on the environment, which appeals to many end users.
A rewarding way to profit from natural gas over the long term is through Big OIl stocks such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP). All are strong in natural gas, along with other energy areas. Each pays a dividend, which enhances the total return for shareholders.