UNG trims NYMEX futures positions during roll Posted: 06/19/2009 The US Natural Gas Fund finished its four-day roll into the August NYMEX gas futures contract on Wednesday, trimming its NYMEX futures positions in half, a Switzerland-based analyst said. "This is an odd pattern and we are free to speculate whether this is the result of pro-active governance from the managers of the UNG or the result of a [Commodities Futures Trading Commission/NYMEX] intervention," Olivier Jakob said. Gas market participants and regulators continue to watch closely as UNG - which is an exchange-traded fund structured to track the prompt-month gas futures contract - continues to grow, adding long positions in the natural gas markets. Most recently the fund doubled its holdings in the IntercontinentalExchange's Henry Hub natural gas swap contract. The fund now holds $4 billion worth of gas futures and swaps. Before UNG's roll - which began on June 12 and ended June 17 - the fund held about 25% of the July NYMEX gas futures contract as well as about 33% of the NYMEX Henry Hub swaps, and an unknown percentage of the Henry Hub lookalike swap on the IntercontinentalExchange. Unlike many funds, UNG is transparent in the number of positions it holds in each market and posts its roll dates and the number it is buying and selling on its website. However, the large fund's percentages of the market had caused Jakob to warn that the large amount of positions could cause a price disruption in the NYMEX July/August spread during the roll. Over the course of the four-day roll, the July/August spread tightened only a few cents on settlement. On Friday, the first day of the roll, the spread remained flat at 21.4 cents, with both the July and August NYMEX contracts losing 7.6 cents. On Monday, the spread tightened to 20 cents, and the July contract gained 20 cents, while on Tuesday, the spread tightened again to 18.3 cents, and the July contract fell 5.3 cents. On Wednesday - the last day of the roll - the spread tightened even further to 17.1 cents and the July contract gained 12.4 cents. In total, over the four-day roll, the July/August spread shrank 4.3 cents and the prompt-month contract gained 32 cents. On Thursday, the contract lost 16 cents and the spread widened to 18.5 cents. But traders and analysts say the change in the spread on settlement doesn't tell the whole story. Pax Saunders, analyst at Gelber & Associates, said that intraday the spread widened during the roll, although he noted it was not a significant amount. Tom Saal, vice president of energy trading at Hencorp, said the UNG roll could have helped push the gas market higher during the four-day roll. "Don't underestimate implications of UNG fund," he said. "They may be helping push it up." Most funds roll their position mid-month into the next month, so UNG was not the only fund rolling, he said, noting that while the market was moving upward, the funds' rolls could have exaggerated that move, especially since the market fell Thursday after the roll was complete. But, it's hard to tell exactly what happened since the market on Thursday also saw a larger-than-expected build to underground storage stocks, and market participants were already expecting the build to be far above the year-ago and five-year average builds. Jakob said the heat on the fund is increasing and, given that asset managers will need to report their holding of the UNG at the end of the month for the quarterly Securities and Exchange Commission filings, he would not exclude a cutback in positions as some might not want to have all their UNG assets go on the record.
oh boy a few cents.. big deal.. go ahead do the math for us all on th ng futures.. i know its a big number.. but read the bottom of that post.. if ung gets approval then natty rallies hard and so does ung.. if not then ung just follows gas market.. to me this is great risk reward.. i am buying more tomorrow.. thanks a lot landis,,,
If UNG gets approval for what? Another ET alias like you, T28? Given your comments following your "cut and paste" article you clearly have no idea what is going on with this ETF. Too funny. I assume that you will now follow me around ET with 900 aliases from Australia attacking me, just as you do Jack Hershey. Obviously, you lead a most pathetic life.
you always have to get the last word in huh Landis... too funny. Yes we aussies drink lots of your american Foster's..not! I think I saw you in a movie.. it was bruno.. the secret is out. lol approval for 600 million more shares.. so they can buy even more ng contracts funny how just overnight in the depreciation of my naked short UNG puts i made more than you will most likely make this week. Look at UNg.. sitting tight.. you guys on here will never get it. I will be out of your hair soon.. cuz this colony of crap is just too poor for me.
hmm.. ung rallies 2 bucks in the last 4 days.. yeah you are soo right landis.. it is a ponzi scheme!!!!! more rallies to follow..
I did look up historical data on contango for another energy market - oil: 1996-2005 http://www.fullermoney.com/content/...oilback1012.png This data shows that, OVER A PERIOD OF TIME, USO-like investor would not suffer tremendously from negative roll yield. May be nat gaz is a different animal (due to seasonality mentioned by Landis) and has some other contango patterns, but until I see the data, I would assume it behaves similarly to oil.
Nat-Gas is indeed a much different animal. Studies have shown that since the inception of the UNG Fund in April of 2007, the nat-gas futures market has been in contango 94% of the time - - - as opposed ro 78% since April of 1990. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZls9qTynabE
post some results here... http://www.elitetrader.com/vb/showthread.php?threadid=183174 Landis was right trading ung is STOOPID! I lost 5k trading that wretched etf!
Well, with 8 thousand posts in 3 years, I hope Landis is right. I'd hate to think of all that wasted time IF being right wasn't the case. The operative 2 words in your second sentence is "I lost". Got it? I doubt it. Lastly, contango works both ways and the adage that "the early bird gets the worm" is more applicible to fishing.