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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (83278)	4/19/2007 9:51:17 AM
From: LoneClone	Read Replies (2) \| Respond to of 206326

First U.S.-Based Natural Gas ETF Hits AMEX By Todd Flagg 18 Apr 2007 at 06:36 PM GMT-04:00 resourceinvestor.com St. LOUIS (ResourceInvestor.com) -- The first U.S.-based natural gas exchange traded fund (ETF) launched today on the America Stock Exchange (AMEX), closing its first session almost 1% higher. The United States Natural Gas Fund [AMEX:UNG], developed by Victoria Bay Asset Management, opened today with 30 million units, according to regulatory documents. The investment objective of the exchange-traded fund is to reflect the percent changes for natural gas delivery at Henry Hub, Louisiana. “UNG intends to invest primarily in those futures contracts that are in the two months closest to expiration because we feel those contracts will permit the fund to best achieve its investment objective,” said John Hyland, CFA, Portfolio Manager and Director of Portfolio Research in a statement to the press. This is the second product launch on Amex by Victoria Bay Asset Management. The first, on April 10, 2006, was the listing of the United States Oil Fund, LP (USO). USO currently has assets of about $800 million. However, the Natural Gas Fund isn't exactly an exchange-traded fund since ETFs hold securities and track indexes that measure the movement of stocks or bonds. Instead, this fund is structured as a commodity pool managed by Victoria Bay. Because of this, the fund is not registered as a mutual fund under the Investment Company Act of 1940, nor is it subject to its rules. The 1940 law regulates the operation of mutual funds and ETFs. After starting at $50, shares of the fund increased by .73% or 77 cents by the end of trading today. Gas for May delivery rose 8.2 cents, or 1.1%, to $7.501 per million British thermal units (mBtu) at today's settlement of trading on the New York Mercantile Exchange. Natural gas futures have risen nearly 12% so far this year in spite of larger than normal inventories following a mild winter. Natural gas has had exceptional volatility during the past two years. In Dec. 2005, natural gas nearly hit $16 per mBtu but has dropped below $4 per mBtu several times since then. In August 2006, New York energy hedge fund MotherRock L.P. closed down after suffering major losses in the natural gas market. MotherRock was one of the biggest hedge funds in New York trading natural gas futures, managing approximately $430 million in assets at its height in May. Then in mid-September 2006, Connecticut-based Amaranth Advisors, a multi-strategy hedge fund with assets of $9 billion at the time, reported a loss of $6 billion in less than two weeks in natural gas futures. The failure was the largest hedge fund collapse in history. Natural Gas Futures tumbled by 35%, trading as low as $4.810 after the incident. The contract hadn’t touched levels this low since late February, 2004. However, the price climbed from $4 to $9 per mBtu from September to November. In the coming months, Darin Newsom, a senior analyst at DTN, expects natural gas to head into a “seasonal sideways to down trend that tends to establish a low in early July.” “The front-month contract should trade between $7.96 and $6.86 with the latter posted by the August contract in early July,” Newsom said. He said the structure of the market would seem to confirm this outlook as noncommercial (speculative) traders continue to add to their net-short futures position while the futures spreads continue to show carry, indicating a neutral to bearish underlying supply and demand situation. “Between July and December, the market could rally back to near $11.90 meaning a theoretical gain of about $3.50 in the January 2008 contract from July through December,” he added. Movements in the price of natural gas are caused by the many factors that include: * Worldwide or regional demand for energy, which is affected by economic conditions; * The domestic and foreign supply and inventories of oil and gas; * Weather conditions, including abnormally mild winter or summer weather and abnormally harsh winter or summer weather; * Availability and adequacy of pipeline and other transportation facilities; * Domestic and foreign governmental regulations and taxes; * Political conditions in gas or oil producing regions; * The ability of members of OPEC to agree upon and maintain oil prices and production levels; * The price and availability of alternative fuels, and; * The impact of energy conservation efforts. Concern has been added with allegations and denials that both Russia and Iran are trying to set up a natural gas cartel in the same vein as OPEC while attending the Gas Exporting Countries Forum (GECF) in Qatar. Iran's supreme leader, Ayatollah Ali Khamenei, had unnerved consumer countries in January by suggesting setting up a gas body like the OPEC that would include Russia. Rumours were quelled after representatives from both Russia and Iran denied that gas exporting countries were seeking to create a cartel like OPEC and that the point of the forum was to cooperate more to ensure international markets are securely supplied. "The understanding about this issue is not the creation of a 'gas OPEC' but rather it is to emphasize continuing cooperation and adding to cooperation," Mehr News Agency quoted Iran's OPEC governor, Hossein Kazempour Ardebili as saying. He said the goal for gas producers was "not to create a cartel but rather [it is about] the security of supply, providing the market's needs and voluntary cooperation of countries based on political tastes." Although Iran has the world's second biggest reserves of gas behind Russia, it has been slow to develop gas exports, partly because U.S. sanctions on the country restrict access to the main technology for making liquefied natural gas (LNG). The gas market, unlike the oil trade, is dominated by long-term supply contracts, which analysts say would make it difficult to set up an OPEC-style cartel.