Natural gas prices, along with the commodity-related exchange traded fund, surged Monday on speculation that the U.S. would suffer through another week of lingering summer heat.
The United States Natural Gas Fund (NYSEArca: UNG ) rose 4.1% Monday. Despite the summer rebound, UNG is still down 5.3% year-to-date.
Meanwhile, natural gas futures were 3.9% higher to $2.907 per million British thermal units.
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The natural gas trade has legs as warmer weather conditions would fuel natgas demand for electricity generation.
"We're certainly looking at, in part, weather-related trade with warmer weather in the East," Tony Headrick, an energy analyst at CHS Hedging, told the Wall Street Journal .
Moreover, Headrick pointed out that recent data revealed a smaller-than-expected increase in the amount of natural gas in storage, which further supported prices.
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However, market observers warn that natural gas demand will dip as the seasons change and temperatures cool. Some analyst are already warning of a potentially new record high natural gas inventory levels in the months ahead.
Still, natural gas may find further support as we head toward the winter months and heating demand rises.
"In the short term, the National Oceanic and Atmospheric Administration (NOAA) is predicting a wet and cold winter as El Niño wanes and the Pacific cools this fall," Patrick Gourley, an assistant professor of economics at the University of New Haven, told TheStreet . "Any large spike in natural gas prices , however, will be partially attenuated by the high inventories suppliers have from last year's mild winter."
Recent data showed natural gas storage levels revealed rose 36 billion cubic feet, compared to expectations of a 41 billion injection, a 51 billion cubic feet jump in late August and 72 billion cubic feet for the same period last year.
For more information on the natgas market, visit our natural gas category .
United States Natural Gas Fund
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
This article was provided by our partner Tom Lydon of etftrends.com.