US investors snapped up the last new shares offered in the United States Natural Gas Fund as the fund waits government approval to issue more units. The fund has asked the Securities Exchange Commission for permission to issue 1 billion new shares.
This demand is an early indicator that natural gas prices are at a low and the participating investors are betting on higher prices in the future. Many analysts still forecast natural gas prices to be in the $6-$7 range as cuts in conventional production begin to take effect in Q3/Q409. Soft demand for natural gas is expected to turn around with improvements in the economy. When that occurs is still to be determined, but most analysts see improvements in Q110. In addition, to increased demand as a results of economic recovery, legislation was tabled yesterday in the US to increase tax credits to provide incentive to increase the usage natural gas vehicles (see article below). Legislation that is being sponsored by Senator Robert Menendez (D-NJ), co-sponsored by Senator Orrin Hatch (R-UT) and Majority Leader Harry Reid (D-NV) and supported/promoted by Texas billionaire oil tycoon turned wind turbine/natural gas champion, T. Boone Pickens.
Today, the US Natural Gas Fund owned ~124,926 natural gas futures contracts. The number of shares outstanding reached a record high of 322.3 million, more than 10 times the total at the beginning of the year and holding a value of $3.97 billion.
Bloomberg: U.S. Natural Gas Fund Grows to Record on Demand Surge
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