Thursday, April 22, 2010

The Tale of Natural Gas Contracts, UNG, and, and Gas Producers

I am interested in buying natural gas for the Fall or winter of 2010. I checked UNG for the period April 20-3rd week of October last year. UNG went from about $14.50 (!) to $11, while natural gas contracts actually went up from $3.75 to $5 in the same period (!).

Current storage:


Current storage is 5.5% greater than last year, and 18.5% larger than the 5-year average. Storage this year is even worse than last year, so performance might be similar, until late Fall that is. UNG could well be trading around $5 in October. The Canadian version is and it suffers similarly.

Please take a look:

Natural Gas Contracts:


Amazingly, UNG and have negative correlation to the price of gas.

So, I am looking for natural gas producers that are mostly unhedged to the price of natural gas, i.e, that have not locked in at low prices.

Candidates mentioned are CHK and HGT in the U.S.

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