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3 Natural Gas ETFs to Buy on the Dip By StockNews

3 Natural Gas ETFs to Buy on the Dip © Reuters. 3 Natural Gas ETFs to Buy on the Dip

Natural gas prices have soared to record highs this year due to a global energy crunch. Furthermore, because the EIA anticipates prices will remain high, at least through year’s end amid below-average inventories and rebounding demand, natural gas ETFs should benefit. We believe natural gas ETFs United States Natural Gas (UNG), United States 12 Month Natural Gas (UNL), and iPath Series B Bloomberg Natural Gas (GAZ), which have dipped in price lately, could be wise bets to capitalize on the favorable industry trends. Let’s discuss the funds.Natural gas prices are hovering near record high levels due to rebounding demand amid the global economy’s reopening. Below five-year average inventory levels are driving prices higher. In addition, U.S. gas futures recently touched 12-year highs. Gas futures rallied to hit $6.280 in September, more than twice the $3.0141 seasonally-adjusted 10-year average.

Because the winter season is nearing, demand for liquefied natural gas (LNG) is also rising. U.S. exports of LNG are approaching a record high this year, and Energy Information Administration (EIA) anticipates new record high exports for next year. Moreover, the organization expects the winter heating season will face natural gas inventories that are 4.8% below the five-year average, which will contribute to U.S. natural gas prices remaining high through the winter.

We think natural gas ETFs, United States Natural Gas Fund LP (UNG), United States 12 Month Natural Gas Fund LP (UNL), and iPath Series B Bloomberg Natural Gas Subindex Total ReturnSM ETN (GAZ) are well-positioned to benefit from this solid backdrop. So, it could be wise to buy the recent dips in these ETFs.

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