Investors Drive Up Natural Gas as Oil Slumps

Prices for the gas are down a whopping 40% so far in 2023.

Reviewed by: Ron Day
Edited by: Sean Allocca

The price of West Texas Intermediate crude oil crossed $90 per barrel for the first time in 10 months last week, so it’s as good a time as any to check in on oil-related exchange-traded funds. 

The United States Oil Fund (USO) is up 15.3% year-to-date, which is slightly better than the 13.3% gain for WTI. The fund hasn’t attracted interest from investors this year, though. In fact, they’ve taken $750 million out of the fund. 

Meanwhile, the Energy Select Sector SPDR Fund (XLE), which holds stocks of energy companies, is lagging underlying oil prices with a 7.6% gain. It too has seen outflows this year to the tune of $3.1 billion. 

Along with XLE, a bunch of other energy stock ETFs have also seen outflows in 2023, including the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the First Trust Energy AlphaDEX Fund (FXN), each of which has outflows of around $1.3 billion this year. 

In aggregate, energy stock ETFs have seen outflows of around $10.5 billion this year. 

Bargain Buying In Natural Gas ETFs

But while investors largely shunned oil and energy equity ETFs, they’ve bought heavily into funds tied to natural gas. 

Prices for the fuel are down a whopping 40% so far in 2023, which seemingly has prompted investors to go bargain hunting. 

The United States Natural Gas Fund (UNG) and the ProShares Ultra Bloomberg Natural Gas (BOIL) have seen year-to-date inflows of $1.1 billion and $1.6 billion, respectively—more than any other commodity ETFs. 

Unlike oil, which has been rising on the back of record demand and supply cuts by OPEC, the natural gas market is in the midst of a glut. 

U.S. natural gas inventories are significantly above last year’s levels, while storage in Europe is close to full, months ahead of schedule. 

Sumit Roy is the senior ETF analyst for, where he's worked for 12 years. Before joining the company, Roy was the managing editor and commodities analyst for Hard Assets Investor. He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing pickleball and snowboarding.