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Amex Launches Fund based on price of Natural Gas futures

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Amex Launches Fund based on price of Natural Gas futures

Unread postby DantesPeak » Sun 22 Apr 2007, 21:25:58

This is set up similarly to the existing one for crude oil.

It may work the best for short term traders who intend to buy and sell in a period of a month or two or less.

It appears the biggest drawback to these type of funds is that they buy futures contracts on the nearest month. When those futures are about to expire, they buy the next month. However the next month may be at a higher price, which it frequently is for oil. Therefore the fund doesn't capture all the market gain sometimes.

However if month to month futures contract prices stay close together, it may be suitable for investors with a longer trading horizon.

$this->bbcode_second_pass_quote('', 'N')atural Gas Week (Monday, April 23, 2007)

There's a new way for investors and hedgers to manage their exposure in natural gas, called the United States Natural Gas Fund, which entered the equities marketplace last week. Gas futures traders said the new fund could be a bullish driver for natural gas futures, possibly increasing liquidity, and ultimately enticing new players into the market.


[no link, subscription required]

$this->bbcode_second_pass_quote('', 'A')MERICAN STOCK EXCHANGE AND VICTORIA BAY ASSET MANAGEMENT LAUNCH FIRST U.S. NATURAL GAS-BASED FUND

New York, April 18, 2007 — Victoria Bay Asset Management, LLC and the American Stock Exchange® (Amex®) announced today the launch of the United States Natural Gas Fund, LP (UNG), an exchange traded security based on natural gas, which will list on the Amex under the ticker “UNG.”

The investment objective of UNG is to have the changes in percentage terms of the unit’s net asset value reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas. It is not the intent of UNG to be operated in a fashion such that its NAV will equal, in dollar terms, the dollar price of spot natural gas or any particular futures contract based on natural gas.

UNG intends to invest primarily in those futures contracts that are in the two months closest to expiration because we feel those contracts will permit the fund to best achieve its investment objective,” said John Hyland, CFA, Portfolio Manager and Director of Portfolio Research. The partnership does not seek to use leverage in the portfolio to achieve its investment goals.

“The Amex is pleased to be partnering with Victoria Bay Asset Management again to bring another futures-based product to the marketplace,” said Scott Ebner, Senior Vice President of Amex’s ETF Marketplace.


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Re: Amex Launches Fund based on price of Natural Gas futures

Unread postby Tanada » Sun 06 May 2007, 07:48:39

Should we have a Natural Gas record thread like the Gasoline and Oil threads? I purchased my new efficient furnace two years ago because Natural Gas hit $11/ccf and I was loosing too much money in winter, however since then things have settled into the 5-8 range and seem fairly steady depending on the season. WHen do you think Natural Gas will spike way up again? Dante? Pupp? Shortonoil? Anyone?
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Re: Amex Launches Fund based on price of Natural Gas futures

Unread postby Newsseeker » Mon 07 May 2007, 08:18:52

How great that a new Fund is going to push up prices.
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Re: Amex Launches Fund based on price of Natural Gas futures

Unread postby DantesPeak » Mon 07 May 2007, 12:04:01

$this->bbcode_second_pass_quote('Tanada', 'S')hould we have a Natural Gas record thread like the Gasoline and Oil threads? I purchased my new efficient furnace two years ago because Natural Gas hit $11/ccf and I was loosing too much money in winter, however since then things have settled into the 5-8 range and seem fairly steady depending on the season. WHen do you think Natural Gas will spike way up again? Dante? Pupp? Shortonoil? Anyone?


Recent reports put the marginal cost of new NG production in the US and Canada at about $6 to $8 (US). With the current price near $8, it might be near some kind of floor (barring some type of financial meltdown like we saw last year with a NG hedge fund).

If the weather stays more or less the same the next three years as it has over the last year, we could face some type of natural gas crisis about mid-2010. At that time not only NG inventories will be lower, but the peak of the solar cycle will occur. I am no expert on solar cycles, but there is some scientific consensus that solar activity will peak about 2010-2011 and bring warm weather to North America. Cooling demands may hit records then.
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