United States Natural Gas (NYSE: UNG), the exchange traded fund for natural gas, is up more than 3 percent for the week (chart below).
That is a turnaround from its being off for the last month, quarter, and six months of market action. For 2014, United States Natural gas is up 4.30 percent. Over the last year of trading, however, United States Natural Gas has risen over 17.50 percent.
The reason the performance is so much better over the last year is that the previous winter saw United States Natural Gas soar. The weather was cold in the northeast United States. Demand for natural gas surged to heat homes and businesses. As a result, the price increased tremendously over the course of the winter.
There are many reasons to expect that to happen again.
Another cold, cold winter is predicted for the United States. That will again increase the demand for natural gas to heat homes and offices. A major reason the price of natural gas rose last year is there was not enough pipeline capacity to distribute it efficiently and effectively: there still is not. As a result, the price of natural gas should rise again as the winter endures. From that, the price of United States Natural Gas will rise again; as it did last year.
Another reasons is the increased investor attention on natural gas in the United States.
Shale operations in Asia and Europe have performed poorly. China has tremendous potential, but little in actual natural gas production, now or anytime soon. Investors are coming to North America, especially the United States, for safe, secure energy assets. For many reasons, natural gas is very appealing. That too will take the price of United States Natural Gas even higher.
It is looking to be a cold winter for the United States, which should heat up the price of United States Natural Gas!