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The gas ETF is at all-time low as oil funds rise (UNG, USO)

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United States Natural Gas ( UNG , quote) is now at an all-time low even though other energy exchange-traded funds such as United States Oil ( USO , quote) are enjoying a strong run.

UNG is down across all periods, having lost 93% of its value since starting trading at the equivalent of $104 back in April 2007. By contrast, USO is up more than 16% for the quarter as oil prices climb. In 2011 alone, UNG is off by more than 36%. This will not last, as has been detailed in previous articles on www.emergingmoney.com .

United States Natural Gas has been under enormous pressure as of result of high stockpiles, mild weather across the country, and the way the ETF structures its holdings. The prospect of massive new supply of gas from U.S. shale deposits is not helping, either. Technically, the relative strength index rating -- a measure of how well a security is faring compared to the broad market -- for UNG is 37.42. For USO, the relative strength index rating is 65.79. A relative strength index rating under 30 is when a security is considered to be oversold while a relative strength index rating of 70 is when a security is considered to be overbought, so both funds are close to their respective trigger points.

Eventually, cold weather will arrive across the United States, stockpiles of natural gas will be consumed, present contracts will expire and be replaced by more profitable ones -- and the price of UNG will rise.

Even a reversion to the 50-day average would take UNG up 12% from these depressed levels.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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