ETF Spotlight: BOIL Heats Up as Natural Gas Prices Spike

ETF Spotlight: BOIL Heats Up as Natural Gas Prices Spike

The ETF based on natural gas futures has recovered some ground lost in recent years.

ETF.com
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Contributing Editor
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Despite a Thursday price drop, the futures-focused ProShares Ultra Bloomberg Natural Gas (BOIL) ETF has jumped more than 7% over the past five trading days, a result of rising natural gas prices and expectations for a hot U.S. summer that may spur higher energy demand.

BOIL has risen roughly 43% over the past month to trade around $21 a share June 13, according to etf.com data. Still, the fund has a long way to travel to recover its losses of recent years. It is down 22% year-to-date. BOIL's declines dovetailed with a steep drop in natural gas prices. 

etf.com: BOIL chart

The fund has gained as natural gas futures reversed course, more than doubling since May 1 to $2.954 per metric million British thermal units (MMBtu), according to Trading Economics. That increase has come amid an unexpectedly small increase in natural gas inventory, declining production and the looming summer. 

BOIL fell about 6% Thursday, a day after a U.S. Energy Information Administration report showed stockpiles at about 24% above their five-year average. The report also revised its forecast to predict a bigger downturn in natural gas production this year than it had previously gauged. The EIA also increased its forecast for futures prices in 2024.

BOIL provides two times the daily return of an index that measures daily price performance of natural gas as reflected through publicly traded natural gas futures contracts. Daily compounding of returns can lead to the fund's returns varying significantly from this exposure over longer holding periods. The price shifts reflect both price changes on BOIL's futures contracts and any gain or loss from rolling those futures contracts. 

The fund, which debuted in October 2011 and has $610 million in assets under management, targets short-term investors, not those looking to hold assets for longer horizons. It carries a 0.95% expense ratio. 

BOIL is 100% invested in gas futures contracts , according to ProShares's page for the ETF.

James Rubin is a contributing editor for etf.com, where he produces the Morning Exchange and Weekly Exchange newsletters. A longtime financial writer, editor and book author, he formerly held positions as a news and markets editor for the Americas at CoinDesk, where he focussed on cryptocurrencies. 

He provided editorial guidance for a Wall Street Journal best-selling book on Bitcoin and oversaw a startup newsroom focused on digital financial assets. He has edited for TheStreet and Unchained, where he wrote daily news stories about the trial of fallen crypto entrepreneur Sam Bankman-Fried. His writing has also appeared in The Hollywood Reporter, Forbes.com, AdWeek, Bankrate, The Financial Brand and The Wall Street Journal. He has also written for Forbes Insights and the Economist Intelligence Unit, including papers presented at World Economic Forums in Davos and Mumbai. 

James is the co-author of The Urban Cyclist’s Survival Guide (Triumph Books) and has been interviewed about bike safety on a number of NPR affiliates. In a prior career, Rubin was a world-ranked tennis player, once competing in Wimbledon’s qualifying rounds. He speaks fluent German and is a graduate of the Columbia University Graduate School of Journalism and received his BA at Columbia University.