Natural Gas Trading Higher After Undersupply Reports

The natural gas futures are trading higher this afternoon following

reporting the natural gas undersupply in the UK. According to the report, the undersupply in the UK was approximately 5 million cubic meters a day, as flows from the Isle of Grain LNG terminal decreased close to zero and input from the South Hook terminal fell by 25%. Prior to the spike in the natural gas futures, the commodity was trading near its 10 year lows of $2.204 per MMBtu. The price of natural gas has been under heavy pressure due to the warm winter in the USA. On the other hand, president Obama has recently announced that he wants to establish a program that would research the ways in which natural gas could be used to power vehicles. Successful execution of this program and the increase in the number of natural gas vehicles could boost the price of natural gas higher in the future. Due to the lower natural gas prices, some companies have recently lowered their natural gas rig count. Additionally, larger companies, such as Chesapeake Energy Corporation

and ConocoPhillips

have implemented production shut-ins. United States Natural Gas Fund ETF

that reflects the changes in percentage terms of the spot price of natural gas delivered at the Henry Hub is currently trading at $18.49, up $0.59 or 3.30% from yesterday's closing price.