Velocityshares 3X Long Natural Gas ETN (UGAZ)

[researcher59]

NG $2.79, I'm surprised we're still lanquishing well below $3 .... Celsius weather and consumption forecast for the next 4 EIA reports has been turning steadily more bullish over the past few days.

Celsius -

After the projected -63 BCF withdrawal for this Thursday's EIA report drops the natural gas storage deficit versus the 5-year average dips to around -20 BCF, (and likely flipped briefly to a storage surplus intra-week), the deficit will likely see rebound back above -100 BCF by the end of the year, as shown in the Figure to the right. Should the bitterly cold forecast variant verify, the storage deficit by December 29 could very well be in excess of -150 BCF. However, even based on the current projection showing a more modest deficit of around -125 BCF, natural gas would still be significantly undervalued by an enormous 20% versus a Fair Price of $3.54/MMBTU. While I believe that such a price is likely out of reach no matter how cold it gets this winter, I feel that natural gas could very quickly rally to $3.00/MMbtu should a colder pattern present itself. While significant downside risk remains in the sector, particularly later this winter and into the spring depending on the evolution of a possible supply/demand mismatch, I feel that, at least near term, upside potential outweighs downside risk.