Natural Gas Lower as Autumn Winds Blow In (UNG)

United States Natural Gas ETF (NYSE: UNG) is lower by 2.5 percent in early trading on Friday. Futures priced declined to $2.70 per million BTU, and reports from the national weather service are calling for colder temperatures in the upper Midwest and northern plains, giving residence in the area a brief taste of autumn after a summer of record heat and severe drought. Temperatures remain elevated in southern states, but traders appear to be positioning for a change in patterns reflecting milder weather, which could curb demand for natural gas used in electricity production.

EIA data yesterday showed natural gas stockpiles rose 28 bcf last week, slightly less than analyst estimates of 33 bcf. However, so far investors haven't noticed significant changes to the overall level of gas production in the U.S. despite declines in rig count. Overproduction in the U.S. drove prices of natural gas to 10-year lows earlier this year. Since then prices have made a modest recovery but potential gains appear to be capped near $3, giving investors little room for upside improvement.

Year-to-date United States Natural Gas ETF (NYSE: UNG) has declined by nearly 30 percent.

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