Natural Gas ETFs Crash And Burn (UNG, FCG, GASL, GASX, XLE)

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The Natural Gas ETF (NYSEARCA:UNG) crashed and burned today as warm winters continue to sidestep natural gas demand.

Natural gas plunged today as the continuing warm winter in America curbed natural gas demand.  Because Americans have not burned as much natural gas to heat their homes this year, supply has steadily out paced demand in the natural gas market.  The natural gas spot price closed today at $2.50 per million British Thermal Units (BTUs), a 15 cent and -5.80% drop according to stockcharts.com.

The United States Natural Gas Fund LP ETF (NYSEARCA:UNG) reacted severely to this drop in price, as NYSEARCA:UNG shaved -5.29% of its price last Friday.  By looking at the chart below, it is easy to see that NYSEARCA:UNG has been on a steady decline since September.  As mentioned above, the winter has been warmer and people are burning less natural gas and the results of less consumption are clear:

chart courtesy of stockcharts.com

Other natural gas ETFs and energy ETFs did not respond in chorus, however.  The First Trust ISE Revere Natural Gas ETF (NYSEARCA:FCG) registered a .06% increase, while its leveraged ETF twin, The Direxion Daily Natural Gas Related Bull 3x ETF (NYSEARCA:GASL), registered a .06% increase.  The gains in both NYSEARCA:FCG and NYSEARCA:GASL are minimal and poorly reflect on both the NYSEARCA:FCG and NYSEARCA:GASL decline in past months.  It is likely that NYSEARCA:FCG and NYSEARCA:GASL will follow NYSEARCA:UNG to negative returns in the near future.

The Direxion Daily Natural Gas Related Bear 3x ETF (NYSEARCA:GASX), shaved off -.04% today, but has been on an uptrend lately and will likely break into profits soon since this ETF tracks the opposite of natural gas prices.  In terms of broader energy analysis, the Energy Select Sector SPDR ETF (NYSEARCA:XLE) rose 0.66% today, likely because crude oil (NYSEARCA:USO) closed at $100 per barrel and NSYEARCA:XLE also tracks energy companies involved in oil development.

Bottom Line: Natural Gas prices crashed and burned today, dropping -5.8% and taking its natural gas ETF (NYSEARCA:UNG) with it.  NYSEARCA:UNG dropped -5.29%; the cause of the sell-off is likely due to an unusually warmer winter season across America which has yielded excess supply.  Other natural gas ETFs such as NYEARCA:FCG, NYSEARCA:GASL, and NYSEARCA:GASX have yet to respond to the decline in natural gas prices, although it is certainly likely that these natural gas ETFs will follow NYSEARCA:UNG in the near future.  Meanwhile, (NYSEARCA:XLE) also tracks oil prices, so the natural gas plunge might not have as much of an affect on this energy ETF. 

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