Natural gas prices have risen sharply over the past week, with futures hitting two-year highs due to rising inflation and continued production cuts. Moreover, Hurricane Ida that wreaked havoc in the Gulf of Mexico and shut down oil and gas production could further propel natural gas prices higher. So, we believe natural gas ETFs United States Natural Gas (UNG) and United States 12 Month Natural Gas Fund (UNL) could be wiser bets to capitalize on the rising gasoline prices. Read on.Gas prices have already risen over 80% from their low point in April 2020, when the pandemic halted industrial and economic activity. However, natural gas demand has already bounced back as industrial activity resumes, while extreme weather this year is leading to even more demand. As a result, gas prices have shot up by 41% since last August. Moreover, natural gas futures rallied last week, recording their highest finish for the first time since late 2018 as summer heat intensified concerns about tight supplies later.
Furthermore, supplies and production could temporarily get affected by the hurricane Ida, which swept across the Gulf of Mexico, impacting about 15% of the U.S. total. Of course, it's not helping that other parts of the country are dealing with a heatwave and many expect a cold winter.
Natural gas ETFs such as the United States Natural Gas Fund LP (UNG) and the United States 12 Month Natural Gas Fund LP (UNL) are well-positioned to benefit from these benefits. They are also rated A (Strong Buy) in our proprietary POWR Ratings system.