NEW YORK (TheStreet) -- When it gets cold, that's the time for natural gas, as represented by the United States Natural Gas (UNG) exchange-traded fund, to get hot.
UNG has had its ups and downs this year. But here are three reasons why it should jump later as winter weather arrives.
Cold, bitter weather is predicted, just like last winter, when natural gas prices were driven higher. The Farmers Almanac "is predicting another nasty and frigid winter in the Northeast." Last year, United States Natural Gas went from under $17 a share in November to nearly $27 in April due to "nasty and frigid weather."
UNG stock is up only 1.59% for the year to date but down 16% for the past six months. The stock closed Wednesday at $21.02, up 10.9% over the past 52 weeks.
There is still not enough pipeline infrastructure to prevent a price rise due to increased demand.
Yes, there is plenty of natural gas in the U.S. But it is still in the ground, chiefly in Pennsylvania's Marcellus Shale. There's a lack of pipeline infrastructure to get it to the end user.
Of the 8,000 wells in the Marcellus Shale, which supplies 40% of shale gas production, about 3,000 are idle. About one-half of those not pumping could be put in production if the pipeline infrastructure existed to get the product to market.