US Natural Gas Fund (NYSE:UNG) Soaring

The supply of natural gas in relationship to demand has put downward pressure on heavily exposed natural gas companies and natural gas ETFs like US Natural Gas Fund (NYSE:UNG).

That has changed over the last couple of weeks, as the US Natural Gas Fund has surged by over 12 percent during that time.

It has been March since UNG has traded at current price levels.

With nothing much in the supply equation changing, other than the evil attempt by some Democrats to limit access to the natural gas resources in the Marcellus Shale, it's probably backwardation at this time which has been driving the price of UNG recently.

Backwardation refers to the time future gas prices drop below expected future spot gas prices. That favors an ETF fund like UNG.

U.S. Natural Gas Fund (NYSEArca:UNG) Up on Lower Storage Level Growth

The U.S. Natural Gas Fund (NYSEArca:UNG) was up today as a surprise findings of a report from the Energy Information Administration found natural gas storage levels hadn't grown as high as expected, and the natural gas market responded positively to the news, driving prices up.

While this was a nice surprise for investors, it really is only a short-term event, as even after the lower-than-expected storage growth, figures still have natural gas levels up 18.5 percent higher than the five-year average, and up 5.5 percent from last year.

This shows me that once there is a sustainable turnaround in natural gas demand, the market is looking for an excuse to rise, and those companies and funds positioned for it should reward shareholders handsomely, as seen today with the U.S. Natural Gas Fund and others in the industry.