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Daily ETF Roundup: UNG Surges, VXX Retreats

by Michael Johnston on December 10, 2009 | ETFs Mentioned: UNG • VXX

In a relatively light day of trading, most benchmarks advanced as oil prices continued to slide and optimism over sustained improvements in labor markets continued to build. Meanwhile, Geithner continued lobbying for an extension of TARP and president Obama traveled overseas to accept a controversial Nobel Peace Prize.

The ETFdb 60 Index added 2.39 points, or 0.2%, on Thursday to close at 1,020.72, as gains in most equity ETFs offset losses in bond funds. The ETFdb 60 Index is now up 2.1% for the fourth quarter.

Leading the way higher was the United States Natural Gas Fund (UNG), which added more than 7% following a report from the Energy Information Administration indicating that inventories declined by 64 billion cubic feet to 3.77 trillion cubic feet for the week ended December 4. Even with the material decline, inventories remain 14.3% higher than last year and 15.7% higher than the five year average.

As winter settles in and heaters across the country switch on, UNG has become extremely volatile as investors bet on the impact of weather patterns on natural gas prices. UNG has now added almost 15% since December 3, but is still trading below late-November levels. In addition to domestic weather patterns, a number of other developments around the world could have an impact on gas prices in coming months, including new discoveries and technological advancements.

UNG

Losing ground on Thursday was the iPath S&P 500 VIX Short-Term Futures ETN (VXX), an investment that has exhibited a nearly perfect inverse correlation with equities in recent months. VXX slid 1.7% for the day as expectations for short term volatility in U.S. equity markets declined.

VXX