The natural gas ETF United States Natural Gas (UNG) is causing huge distortions in the gas market. Knowing what UNG is going to do next (or when it might be forced unwind) must open up a lot of opportunities for sharp traders. It seems highly likely that this fund can be nickel and dimed in the market place.
Starting at about 1:00 into the video:
- UNG has an unusually high premium. “This ETF is running huge premium… It runs usually at a 1 or 2 per cent premium. Recently it topped out at a 19 per cent premium to the actual futures.”
- UNG can be 30% of the gas market. “Every month UNG is forced to roll their entire position in the spot month into the next month. And they have controlled upwards of 30% in the spot commitment at Nymex at times.”
- UNG is causing the sharp difference between near term and longer dated natural gas prices. “It’s clearly making this crazy contango in the natural gas market.”
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