Friday, July 24, 2009

Quick Update on UNG

I've just been trying to catch up on some stuff from yesterday. UNG (natural gas ETF) took a good hit yesterday as inventory data came in higher than expected. This has little effect on my reasoning for buying this. Todd Sullivan made a good point that its a little strange that they put out weekly numbers on natural gas as it seems like it might be hard to accurately define that. Not to mention weekly fluctuations can be do to any number of things, and although they can move the price of the commodity (and the ETF), they don't change much about why we own it. It actually ends up being kind of nice because it gives you these windows of opportunity to buy it if you're looking to. You'll never find a stock that does that.

I'm not saying that natural gas is perfect. There is a ton of supply right now, but over time, and if the economy shows some recovery, that will eventually even out. With the rate that production has been shut off, we're likely to see demand move higher than supply at some point which will move prices much higher.

Disclosure: Long UNG

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