Energy Traders Continue to Rotate Out of Oil (USO) and into Natural Gas (UNG)
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Natural gas prices have turned a corner, posting double digit gains in the last thirty days, and up another 3.5 percent on the day.
The rise in prices is directly related to tightening supply, which is in line with demand for the first time in years.
Nat gas prices have been in freefall since 2008, dropping close to 85 percent before bottoming out at just under $2. The crash in prices came as U.S. production grew at a record pace. But estimates for 2012 consumption are also up on increased demand for cheaper power in the form of electricity. Also, produders are pulling back.
Energy traders have been rotating out of oil and into natural gas all week. As a result, oil prices shed nearly 8 percent while natural gas prices keep heading north. It remains to be seen how long the trend will last, but for now the market has clearly made its choice, and it isn't oil.
While the US Oil Fund (NYSE: USO) is down about 0.7 percent at last check, the US Natural Gas Fund (NYSE: UNG) is up 0.8 percent.
The rise in prices is directly related to tightening supply, which is in line with demand for the first time in years.
Nat gas prices have been in freefall since 2008, dropping close to 85 percent before bottoming out at just under $2. The crash in prices came as U.S. production grew at a record pace. But estimates for 2012 consumption are also up on increased demand for cheaper power in the form of electricity. Also, produders are pulling back.
Energy traders have been rotating out of oil and into natural gas all week. As a result, oil prices shed nearly 8 percent while natural gas prices keep heading north. It remains to be seen how long the trend will last, but for now the market has clearly made its choice, and it isn't oil.
While the US Oil Fund (NYSE: USO) is down about 0.7 percent at last check, the US Natural Gas Fund (NYSE: UNG) is up 0.8 percent.
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