A recent article on this site detailed why investors should be bullish about United States Natural Gas (NYSE: UNG), the exchange traded fund for natural gas.
The market proved that point today with United States Natural Gas soaring 2.32 percent on volume of just over 10 million shares (chart below).
As the average daily volume is around 6 million, that is very bullish. When there is heavy volume in an asset class and the price surges, that is a positive signal for investors. The more liquidity, the healthier the market. There was tons of liquidity today for United States Natural Gas.
That obviously makes for a very healthy market for shares of United States Natural Gas.
The market is starting to turn for United States Natural Gas for the reasons cited in the previous piece, “United States Natural Gas Should Keep Rising.” It is predicted to be a cold winter in the Northeast United States. The pipeline network is nowhere close to being able to handle the demand. Those two forces will combine to make the price of natural gas rise due to economic demand.
Speculative interests will take the price of natural gas, and thus United States Gas, even higher.
The markets for oil and natural gas are very deep, and thus very liquid. There is also a basic economic demand for natural gas and oil. That makes these markets ideal for speculators to buy and sell, hoping to book a profit.
Those buying have certainly registered a profit with United States Natural Gas.
More are likely to follow. That will take the price of United States Natural Gas even higher. This will likely happen even more as cold weather sets in on the Eastern Seaboard of the United States. United States Natural Gas is up more than 3 percent for the last week of market action, so it certainly appears to be commencing, especially when today’s performance is considered!