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Analyzing Natural Gas ETFs’ Performances Last Week

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Natural gas ETFs

Between January 11 and January 18, the United States Natural Gas ETF (UNG) rose 8.9%, while the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) rose 13.5%. These ETFs track natural gas futures.

UNG has outperformed natural gas February futures, which have risen 12.4% in the past five trading sessions. Gains in natural gas prices can be positive for natural gas–weighted stocks. Southwestern Energy (SWN), Cabot Oil & Gas (COG), Chesapeake Energy (CHK), and Gulfport Energy (GPOR), the strongest natural gas–weighted stocks, rose 5.5%, 6%, 9.2%, and 13.4%, respectively, last week.

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Long-term returns and the forward curve

Between March 3, 2016, and January 18, 2019, natural gas active futures rose 112.4% from their 17-year low, while UNG and BOIL returned 22.7% and -29.6%, respectively. Since March 3, 2016, UNG and BOIL have delivered lower returns than natural gas active futures, possibly due to a negative roll yield.

BOIL’s actual and expected returns could also be different due to daily price changes. On January 18, natural gas futures for delivery between February and May 2019 closed in descending order, which could be a positive sign for these ETFs’ returns.

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