UNG Finishes Week Up 15%
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Tim Lambert
UNG Finishes Week Up 15%
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Cold weather is making for a hot performance by the exchange traded fund for natural gas, United States Natural Gas (NYSE: UNG).

United States Natural Gas is up for the last week, month, and quarter of market action (chart below).

When cold weather hits the United States, the price of natural gas rises.  That is due to supply and demand.  Natural gas is used to power electrical power plants that warm houses and office buildings.  This is especially true for cold weather in the Midwest and Northeast of the United States.  Last winter was a harsh one in the United States.  It looks to be the same for this year.

That is why the outlook is so bullish for United States Natural Gas.

It is not that there is not enough natural gas in the United States.  There are many major natural gas formations in the United States.  In the northeast, there is the Marcellus Shale.  The Utica Shale begins around Ohio and West Virginia.  The Fayetteville Shale is in Arkansas, with the New Albany Shale in downstate Illinois.  In Texas, there are loads of natural gas fields.  California has the Monterey Shale Formation, which could be the biggest of all.  There are many more.  Suffice to say, there is no shortage of natural gas in the United States.

What there is a dire need for is more pipelines to get the natural gas from the ground to the end user.

Three sets of pipelines are needed to get natural gas from the ground to the factory or home.  These are expensive to build; and take a long time, due to environmental requirements.  As a result, there is not the infrastructure to transport sufficient natural gas without the price soaring.  Some of that is due to basic supply and demand.  Quite a bit has do to with speculators driving up the price due to bottlenecks.  Whatever the cause, investors should be bullish that the price of United States Natural Gas will continue to rise and the temperature drops in the United States.



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