An ETF to Profit From the Natural Gas Comeback

Natural gas trading at all-time lows as emerging market demand grows

Natural gas is due for a rebound, and investors should consider playing the trend with an exchange-traded fund (ETF).

Chief among them is nat gas ETF First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG), which invests in companies with substantial natural gas operations, including some of the best shale-gas companies in the United States. Thanks to technological innovations like horizontal drilling and hydraulic fracturing, the companies owned by this nat gas ETF have been ramping up production.

As you can see on my chart of U.S. dry natural gas production, companies have mastered these new drilling techniques and are supplying the United States with more natural gas than ever before.

If that gas doesn’t find a ready market here in the United States, you can be sure it will find a home in the energy-hungry emerging markets of Asia.

China’s central government has targeted a countrywide fuel mix that increases natural gas’ share to 10% by 2020. And the U.S. Energy Information Administration (EIA) estimates that China’s natural gas consumption will increase 5% a year until 2035.

Additionally, the accident at Japan’s Fukushima nuclear power plant is likely to further increase demand for natural gas, as countries rethink plans for new reactors.

 

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