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Natural Gas Avenues for Investors: Performance in June 19 Week

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Nov. 20 2020, Updated 3:41 p.m. ET

Different approaches to natural gas

Natural gas futures increased by 0.73% between Friday, June 12, and Thursday, June 18. For retail investors who don’t have easy access to the futures market, there are other safer, low-cost avenues to bet on natural gas prices.

The first avenue is the United States Natural Gas Fund (UNG), an ETF that tracks prompt natural gas futures. Shares of UNG trade on the NYSE (New York Stock Exchange) like company stock. UNG shares gained by 0.97% this week.

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The second avenue is the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which holds many American energy companies. Many of these energy companies have exposure to natural gas prices through their upstream gas production operations. So because of the indirect exposure to volatile natural gas prices, an ETF like XOP is a safer, more diversified option for more conservative investors. But XOP fell 0.43% this week.

Comparing performances

As you can see in the above graph, UNG mirrored natural gas (NG) this week, giving mostly similar returns throughout the week. However, UNG ended up slightly higher than natural gas futures at the end of the week.

XOP underperformed both natural gas and UNG throughout the week. It also ended Thursday, June 18 with lower returns compared to natural gas as well as UNG. This is due to XOP’s indirect exposure to natural gas prices and because it has companies with exposure to crude oil prices, which mostly fell this week. You can follow our weekly recap of crude prices on our Energy and Power page.

XOP holds premier American gas producers like Noble Energy (NBL), Chesapeake Energy (CHK), and Range Resources (RRC). All these companies make up 4.3% of XOP.

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