Many asset classes are sensitive to seasonal trends, but perhaps none more so than commodities. With that idea in mind, natural gas exchange traded products, such as the United States Natural Gas Fund (NYSEArca: UNG) and the iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ), could be worthwhile trades this month.
Traders are anticipating the sweltering heat could raise natural-gas consumption as households and offices use more gas-powered electricity to run air-conditioning units.
Related: Natural Gas ETFs Heat Up on Warming Weather
The natgas market has been closely tracking weather projections in recent weeks as traders tried to price a shifting outlook on early summer electricity demand for air conditioning. Gas typically dips to a seasonal low during the spring’s mild temperatures before hot summer weather raises demand for gas-fired electricity generation.
Analysts now point out that weather updates for mid-June are showing warmer-than-expected temperatures in the southeast, which has strengthened demand expectations in the biggest region for gas-fired power.