Tuesday, February 1, 2011

Natural gas: bad news for UNG lovers; contango is back in full force

As readers know, we follow the contango/backwardation situation closely as it significantly affects UNG prices. Contango causes losses on UNG, by doing nothing and without requiring natural gas prices to drop. Is is a very bad condition for UNG as it needs to all its contracts every month.

This is the status as of 2:15PM today:

While this is not good news, actually, bad news for UNG holders, prices have been very volatile and this situation changes day after day. However, it has been a while since it was this consistently bad. There is contango in every singe month of 2011. From June to March for example it is +2.62%.

Anyone wishing to buy UNG, stay tuned and do your due diligence.
Posted by Nexa at 2:54 PM

1 comment:

  1. BentoFebruary 7, 2011 at 8:23 PM

    Hello nice reports! I was wondering, why is it though that because of contango that UNG continues to poorly correlate ? Is backwardation good ? Why ? I understand the concepts but I don't know how it actually effects it ?

    ReplyDelete

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