A lot is going on.
• Gold surges past $970... moving closer and closer to $1,000.
• Gold stocks enjoy huge spike with gold... big gold stock fund up 7% to reach highest high since early June.
• No rest for natural gas... more miserable new lows for natural gas funds.
• Muni bonds continue amazing rally... scores of muni bond funds reach another round of 52-week highs.
• ECB keeps rate unchanged at 1% and gives money in the one year at 1%.
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Showing posts with label natural gas. Show all posts
Showing posts with label natural gas. Show all posts
Thursday, 3 September 2009
Natural Gas
Good to know: the UNG ETF is not the best way to play the eventual price rebound in natural gas. There is some serious contango in the market (so much so that the current price of $2.73 for Oct is just under 60% of the Dec contract at $4.69). Prior to current month expiry, the UNG ETF “rolls” the contract to the next month. When this roll takes place, they sell the current month at say $2.73 and buy the next month at $3.89 (current price of Nov). When they do this the price of UNG does not change as it ends up buying a higher priced contract for which to trade around (they try and match the percentages of the change in price). Effectively, your cost base gets eaten away by the contango and you lose out on the current contract price. The only way it makes sense to buy an ETF like this is when there is backwardation in the market of the underlying commodity.
Natural Gas is poised for a huge move...
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Monday, 31 August 2009
Inspiration...
And elsewhere:
• China considers steel limits... concerns about oversupply send ore producers Rio Tinto and BHP lower.
• Big Canadian banks surge... Toronto-Dominion and Royal Bank of Canada hit new highs.
• Natural gas falls as much as 7% to seven-year low.
Good luck
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Tuesday, 25 August 2009
Natural Gas: a hot topic
What began with the UNG, appears to be spreading quickly across the entire commodity exchange-traded product space. Almost every day another fund is announcing the suspension of new share issues – at the risk of destabilising its tracking record, we might add — on fears the CFTC will soon act to restrict fund positions across commodity futures.
From the Financial Times
Investors who followed the dramatic growth of United States Oil at the end of 2008 and beginning of 2009 probably remember how it took up a vast share of the U.S. oil futures market on the New York Mercantile Exchange, or NYMEX. Without CFTC scrutiny, the fund never had to stop issuing shares, but it did produce tremendous distortions in the market as other traders front-ran its massive trades and prevented it from benefiting as the spot oil price began to rise. As assets fell, so did the contango produced by the USO’s holdings, and the fund finally began to move with the oil prices.
The bigger and badder sequel to USO began in the Spring of 2009 as money flooded into United States Natural Gas. Compared with crude oil, which has one of the largest and most liquid commodity futures markets in the world, natural gas is a sleepy corner of the market. Assets in UNG swelled to more than $4 billion by July 2009, by which point the fund held nearly every long position in the front-month contract of the NYMEX natural gas contract, as well as huge positions in the equivalent contract on the London-based Intercontinental Exchange, and substantial swap contracts with major broker-dealers. UNG was not the 800-pound gorilla of the natural gas market–it was King Kong.
Regulators did not step in as UNG continued to grow and its price continued to shrink. The SEC simply refused to approve more shares once the fund ran into its preapproved limits from its latest prospectus (a situation that has since changed). As UNG stopped issuing shares, we saw money start to pour into the similar iPath DJ-UBS Natural Gas Total Return Sub-Index ETN (though this fund is not an exact substitute for UNG, as it tracks a different contract one month further out on the futures curve). However, concerns about regulatory action seem much higher nowadays. PowerShares DB Crude Oil Double Long ETN stopped issuing new shares on August 18 at an effective position size of $960 million (double its actual assets to adjust for leverage). Just this morning, Barclays halted issuing new shares of GAZ.
Investors who followed the dramatic growth of United States Oil at the end of 2008 and beginning of 2009 probably remember how it took up a vast share of the U.S. oil futures market on the New York Mercantile Exchange, or NYMEX. Without CFTC scrutiny, the fund never had to stop issuing shares, but it did produce tremendous distortions in the market as other traders front-ran its massive trades and prevented it from benefiting as the spot oil price began to rise. As assets fell, so did the contango produced by the USO’s holdings, and the fund finally began to move with the oil prices.
The bigger and badder sequel to USO began in the Spring of 2009 as money flooded into United States Natural Gas. Compared with crude oil, which has one of the largest and most liquid commodity futures markets in the world, natural gas is a sleepy corner of the market. Assets in UNG swelled to more than $4 billion by July 2009, by which point the fund held nearly every long position in the front-month contract of the NYMEX natural gas contract, as well as huge positions in the equivalent contract on the London-based Intercontinental Exchange, and substantial swap contracts with major broker-dealers. UNG was not the 800-pound gorilla of the natural gas market–it was King Kong.
Regulators did not step in as UNG continued to grow and its price continued to shrink. The SEC simply refused to approve more shares once the fund ran into its preapproved limits from its latest prospectus (a situation that has since changed). As UNG stopped issuing shares, we saw money start to pour into the similar iPath DJ-UBS Natural Gas Total Return Sub-Index ETN (though this fund is not an exact substitute for UNG, as it tracks a different contract one month further out on the futures curve). However, concerns about regulatory action seem much higher nowadays. PowerShares DB Crude Oil Double Long ETN stopped issuing new shares on August 18 at an effective position size of $960 million (double its actual assets to adjust for leverage). Just this morning, Barclays halted issuing new shares of GAZ.
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Friday, 21 August 2009
Inspiration
What we see today:
• 10-year yield sliding... Touches one-year low at 3.45%.
• Spot price of natural gas breaks psychologically important $3 level... natural gas ETFs hit new low.
• Sears plummets 12%... Largest U.S. department store chain buckles under pension, store-closing costs.
• S&P 500 basically unchanged in August.
Friends, Buy natural gas.
Now.
While we're off to the pub for a pint of Guinness and some good songs. We deserve it. Enjoy your weekend. Sphere: Related Content
• 10-year yield sliding... Touches one-year low at 3.45%.
• Spot price of natural gas breaks psychologically important $3 level... natural gas ETFs hit new low.
• Sears plummets 12%... Largest U.S. department store chain buckles under pension, store-closing costs.
• S&P 500 basically unchanged in August.
Friends, Buy natural gas.
Now.
While we're off to the pub for a pint of Guinness and some good songs. We deserve it. Enjoy your weekend. Sphere: Related Content
Thursday, 13 August 2009
Natural Gas
How are they doing ? The commodity sector and the S&P500, we mean.
We have a chart whith the key commodity related ETFs and the S&P500 starting in March. The US Oil Fund ETF (ticker: USO) and the Base Metals ETF (ticker: DBB) were able to cope with the pace of progress of the S&P500. The Natural Gas ETF (ticker: UNG) was the weakest sector of this group.
We have a chart whith the key commodity related ETFs and the S&P500 starting in March. The US Oil Fund ETF (ticker: USO) and the Base Metals ETF (ticker: DBB) were able to cope with the pace of progress of the S&P500. The Natural Gas ETF (ticker: UNG) was the weakest sector of this group.
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Friday, 17 July 2009
Is a new trend emerging?
Some people say that the natural gas ETF (ticker: UNG) account for one-third to one-half of all gas contracts traded on the futures markets. And maybe this size is influencing the price of the futures.
Anyway, UNG was seeking regulatory approval to issue new shares and this request was rejected.
Since March the fund has grown sixfold.
This restriction could be set up an arbitrage opportunity.. Because if demand for UNG-shares remain high, this ETF can trade with a premium vis-à-vis the underlying asset.
Anyway, UNG was seeking regulatory approval to issue new shares and this request was rejected.
Since March the fund has grown sixfold.
This restriction could be set up an arbitrage opportunity.. Because if demand for UNG-shares remain high, this ETF can trade with a premium vis-à-vis the underlying asset.
Monday, 29 June 2009
Gassssss
We know that ETF’s have become a playing field for the Big Boys as they discovered you could use this stuff for arbitraging futures. The least we can say is that Exchange Traded Funds were not developed for that purpose. This, however, is causing some strange things from time to time.
If we look to the Natural Gas ETF and more in detail to the Open Interest than we see something strange:
If we look to the Natural Gas ETF and more in detail to the Open Interest than we see something strange:
While the price is barely moving:
Friday, 5 June 2009
Accumulation - something is goin' on
Investment wise we like natural gas more than crude oil. Some big things are happening there, right before our eyes. Who is accumulating at these levels? Strange.
TGIF - Time to go for a pint in the pub. Ireland had a wonderful week. Not only outside the countryside but everywhere. God bless Sphere: Related Content
TGIF - Time to go for a pint in the pub. Ireland had a wonderful week. Not only outside the countryside but everywhere. God bless Sphere: Related Content
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