Above is a graph of various commodity ETFs. The main ticker is UNG (United States Natural Gas Fund), a ETF which tracks prices of natural gas delivered at Henry Hub. OIL is the iPath Oil ETN. JJA is the iPath Agricultural Commodities ETN.  JJM is the iPath Industrial Metals ETN. And, JJP is the iPath Precious Metals ETN. The chart displays the year-to-date performance of these various commodity indexes and it’s plainly obvious that one stands out among the others. Generally speaking, non-energy commodities have been on an upward trend since the beginning of the year and in fact would have provided mid-to-high teens returns just in the last few months! Even oil, though down precipitously in the first two months of the year, has rebounded swiftly to near break even year-to-date. Only one commodity seems to have lagged behind the rest - natural gas. 

Natural gas prices have declined nearly 40% since the beginning of the year and have not at all responded to the recent bullishness in the markets. I’ve written before about the value of having oil exposure in your portfolio, but the same could be said of energy exposure in general. These types of commodities act as a hedge against inflation, a direct hedge against increasing energy costs taking a toll out of the businesses you’ve invested in, and prices are supported to some degree by near universal demand and constrained supply. 

Natural gas, however, is fundamentally different from oil and this fundamental difference could explain its recent lag as well as give us insight on its potential to rebound swiftly and vigorously. 

1. Oil is a global market while natural gas is a domestic market. Oil can be easily transported on tankers and through pipelines whereas the transport of natural gas is significantly more difficult. As a result, demand for natural gas in the United States more strictly follows US industrial/residential demand.
2. Natural gas is typically considered a backup to crude oil.