Have Natural Gas ETFs Outperformed Natural Gas?



Natural gas ETFs

Last week (May 25–June 1), natural gas futures-tracking ETFs’ performance was as follows:

  • The United States Natural Gas ETF (UNG) rose 0.3%.
  • The ProShares Ultra Bloomberg Natural Gas ETF (BOIL) rose 0.3%.

Natural gas July futures were almost unchanged. In Part 1, we discussed the factors behind natural gas’s moves during this period. UNG holds active natural gas futures contracts. BOIL tracks twice the daily changes of the Bloomberg Natural Gas Subindex on a daily basis.

Last week, Gulfport Energy (GPOR) and Southwestern Energy (SWN) rose 9.8% and 8.3%, the most on our list of natural gas-weighted stocks. Cabot Oil & Gas (COG) rose 2.4%, the least on our list.

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Long-term ETFs’ returns

From March 3, 2016, to June 1, natural gas active futures rose 80.7% from their 17-year low. During this period, UNG rose 3.8%, and BOIL fell 31.7%.

Since March 3, 2016, UNG and BOIL’s returns were lower than those of natural gas active futures, possibly due to negative roll-yield, which we discussed in the previous part. On June 1, the closing prices of natural gas futures contracts for delivery between July and August settled in ascending order. The price pattern could hamper UNG’s and BOIL’s returns.


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