United States Natural Gas Fund LP (UNG)

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New England area projected cold and snowy!

New England consumes the most liquid natural gas (LNGs) out of anywhere in North America primarily due to high population density and colder climate.

Historically, the price of LNG rises in correlation to snow storms. Because of bottlenecks in the pipelines for LNG, supply is limited in the North East and a demand surge can cause a spike in price.

In 2015, there were only 6 million homes that use traditional heating oil in New England, whereas nearly half of households in the United States use natural gas. Towns that don’t run gas pipelines could also have propane delivered. The pipeline bottleneck is unfortunate for New Englanders who use natural gas especially during a time when prices are exceedingly low. Demand for LNGs is at an all time high and low crude oil prices is suppressing the value further to a spot price around $2.70 per mmbtu. Natural gas reliance is only increasing with the continued effort by the United States to shut down coal plants. For natural gas users, locking in at a low price is highly sensible, or simply buying more blankets.

Consolidated Edison, Inc. is a public company that invests significantly in natural gas transmission projects. They believe natural gas prices could rise to as much as $20-25 mmbtu this winter in the North East. Investors should be on the watch to see how the company reacts over the season and how their projects pan out.