The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) is experiencing a significant rise, driven by a sharp decline in U.S. natural gas futures. As of January 3, 2025, natural gas futures have dropped over 7% to $3.40/MMBtu following a smaller-than-expected storage draw reported by the EIA. U.S. utilities withdrew 116 billion cubic feet of natural gas last week, falling short of the anticipated 127 bcf, which has contributed to a surplus in storage levels. This surplus, combined with revised weather forecasts predicting less frigid conditions, has dampened bullish momentum and pressured prices downward. Additionally, increased natural gas production in the lower 48 states has surpassed year-ago levels, further contributing to the oversupply concerns.
The market's bearish sentiment is compounded by the anticipation of a larger storage draw in the upcoming EIA report, which may not be sufficient to offset the current storage overhang. Despite forecasts of colder weather from January 6-17, which could boost heating demand, the market remains cautious. The recent surge in LNG exports to Mexico provides some support to U.S. prices, but the overall sentiment remains bearish due to the storage surplus and moderated weather forecasts. Traders are closely monitoring key support levels, with the potential for further declines if these levels are breached.
The KOLD ETF has surged to $46.63, marking a 10.68% increase from the previous close.