Tag Archives: UNG

Top Movers in a Volatile Market

Street Insider.com lists some of the most active ETFs today.

At 2 pm:

iPath S&P 500 VIX Short-Term Futures ETN
(VXX) rose 8.37% to $28.30, on midday volume of 44 million shares, already four times more than its daily average volume. The ETF tracks the CBOE VIX, which is up 28.5% today to a near-term high of $42.15.

United States Natural Gas (UNG) gained 1.2% to $6.89 midafternoon on volume of 20.2 million vs. 26.8 daily average.

Utilities Select Sector SPDR (XLU) up 0.34% to $29.35, volume was already double the daily average at 10.6 million. People are moving to utilities for safety and dividends.

United States Oil (USO) fell 1.89% to $36.26 as crude oil futures posted steep losses for the fourth consecutive day. Mid-morning, the June 10 contracts hit an 11-week low near $74.50 a barrel, but were down $1.46 to $75.43 late afternoon. Volume was up 80% to 18 million.

Financial Select Sector SPDR
(XLF) was actually flat at 2 p.m. at $15.26. Volume had surged to 260 million from a daily average of 103 million. Goldman Sachs (GS) is up 1.7% to $144.65 in the wake of its annual shareholder meeting.

Hyland Calls Allegations “Gibberish”

Two of the most popular and least understood ETFs are the U.S. Oil Fund (USO) and the U.S. Natural Gas Fund (UNG). Many have blamed these funds for being partly responsible for excessive speculation that caused the surge in oil and gas prices.

In its effort to decide whether to impose limits on speculators in the energy markets, the Commodity Futures Trading Commission held three days of hearings in Washington.

John Hyland, the chief investment officer for both ETFs testified before the CFTC on Wednesday. Bloomberg gives a good overview of the testimony in which Hyland calls the allegation that his funds are responsible for rising prices “self-serving statistical gibberish.”

IndexUniverse offers the full transcript of Hyland’s testimony before the CFTC. In it Hyland rebutted the CFTC’s allegations by noting that there were only 325,000 investors in the fund and that between 75% and 90% were comprised of individual and retail investors, not institutions or investment funds. He added he believes the funds are widely held because no single investor has filed a 13G of 13F filing with the SEC. These filings are required of an investor holding an interest of more than 5% in a fund.

As for the charge by certain media outlets that the huge popularity of USO and UNG has caused prices to move artificially, Hyland fought back, saying “the management of USO believes that readily available information from USO’s website and other widely available financial news and data sources indicate that many or most of these claims lack merit.”

In February, the Wall Street Journal said USO had gotten so bit it was it’s affecting the oil market.

I followed the story with the following postings.

* Debating the WSJ’s Assessment of USO

* U.S. Oil to Change Roll Policy

* Suspected Front Running Cost USO $120 Million in February

And It Takes Two (Months) to Contango