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Comparing Natural Gas ETFs’ Performances to Natural Gas Prices

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Nov. 20 2020, Updated 5:25 p.m. ET

Natural gas ETFs

Between January 18 and January 25, the United States Natural Gas ETF (UNG) fell 3.6%, while the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) fell 8.1%. These ETFs track natural gas futures.

UNG has outperformed natural gas March futures, which have fallen 5.2% in the past five trading sessions. A fall in natural gas prices could be negative for natural gas–weighted stocks. Range Resources (RRC), Antero Resources (AR), Gulfport Energy (GPOR), and Chesapeake Energy (CHK), the weakest natural gas–weighted stocks, fell 2.4%, 3.8%, 4.5%, and 6.4%, respectively, last week.

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Long-term returns and the forward curve

Between March 3, 2016, and January 25, 2019, natural gas active futures rose 93.9% from their 17-year low, while UNG and BOIL returned 18.3% and -35.3%, 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 25, natural gas futures for delivery between March and May 2019 closed in descending order, which could be a positive sign for these ETFs’ returns.

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