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How Weather Is Affecting US Natural Gas Futures

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Natural gas futures   

US natural gas (DGAZ)(UGAZ) futures contracts fell 0.3% to $3.00 per MMBtu (million British thermal units) in electronic trading at 2:00 AM EST today.

Similarly, E-Mini S&P 500 (SPY) December futures contracts fell 0.05% to 2,506 in electronic trading at 2:00 AM EST.

US natural gas prices are down 16.6% YTD (year-to-date). Moves in natural gas prices impact energy producers (XLE) (IEZ) and ETFs. The YTD returns for the top five natural gas ETFs, ranked by assets under management, are as follows.

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  • The VelocityShares 3x Long Natural Gas ETN (UGAZ) is down 74.7% YTD.
  • The United States Natural Gas Fund (UNG) is down 29.6% YTD.
  • The VelocityShares 3x Inverse Natural Gas ETN (DGAZ) has risen 58.1% YTD.
  • The Ultra Bloomberg Natural Gas ETF (BOIL) is down 53.3% YTD.
  • The United States 12 Month Natural Gas Fund (UNL) is down 15% YTD.

Weather forecasts   

The eastern United States may experience showers and thunderstorms next week. These regions might have cooler-than-average temperatures. The southern United States could face heavy showers for the next few days. The western parts of the country may see warmer-than-average temperatures. Overall, the weather is expected to be mild for the next few weeks.

More than half of US households use natural gas for heating and cooling. Mild temperatures could lead to a fall in natural gas demand, which could pressure US natural gas (UNG)(GASL)(DGAZ) prices.

Changes in weather and demand impact US natural gas inventories.

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