BOIL ETF: What Is Going on With the ProShares Ultra Bloomberg Natural Gas Fund?


  • ProShares Ultra Bloomberg Natural Gas (BOIL) is back in the green today.
  • Shares fell yesterday thanks to Freeport LNG’s liquefied natural gas (LNG) export shutting down.
  • Today, LNG prices are rising, but new action from Russian President Vladimir Putin has raised the stakes for Western oil.
"BOIL ETF" - BOIL ETF: What Is Going on With the ProShares Ultra Bloomberg Natural Gas Fund?

Source: Shutterstock

ProShares Ultra Bloomberg Natural Gas Fund (NYSEARCA:BOIL) has had a turbulent week. The exchange-traded fund (ETF) saw prices plunge yesterday as natural gas futures fell 17%, hitting a three-month low. Today the BOIL ETF is climbing again, but news out of Russia is threatening to complicate matters further. Russian President Vladimir Putin has seized control of Sakhalin Energy Investment Co., a move that will likely affect Western oil producers.

What’s Happening With the BOIL ETF?

Even as markets shift in its favor, the BOIL ETF is experiencing volatility. It began this morning by falling 5% only to immediately rebound. As of this writing, it is up more than 8%. After slowly trending upward for most of this week, shares fell 34% yesterday. This marked the lowest point in months for liquefied natural gas (LNG). Prices are back to rising today, but investors still have plenty of cause for concern about the industry.

Let’s take a closer look at the factors affecting the LNG field and the BOIL ETF.

Freeport Explosion Aftermath

Why did LNG futures fall by so much yesterday? A key reason centers around the recent explosion at Freeport LNG’s Texas Gulf Coast facility. Reuters reports that “The June 8 blast and fire knocked out Freeport LNG’s 15 million tonnes per year (mtpa) Quintana plant, exacerbating global LNG shortages.”  Yesterday brought reports that U.S. regulators will not allow the project to restart until specific safety concerns are addressed.

Since the invasion of Ukraine caused Western oil producers to cut ties with Russia, the oil industry has been in turmoil. This has caused focus to shift to LNG across multiple nations as leaders look for alternatives to Russian oil exports. The Freeport explosion further compromised LNG production in the U.S. at a time when both the U.S. and Europe were already dealing with an oil and gas shortage.

Now the delaying of the facility reopening means that demand will only increase supplies further while demand increases. While LNG prices began moving upward again today, the industry is still facing an uncertain future. Two top LNG producers, Chesapeake Energy (NASDAQ:CHK) and Southwestern Energy (NYSE:SWN), are slightly in the green, like the BOIL ETF. But Cheniere Energy (NYSEMKT:LNG) has fallen 3%.

Russia Seizes Sakhalin

Oil producers also received bad news from abroad today. Vladimir Putin has effectively seized control of the Sakhalin Energy Investment Co. through a new firm. That gives him control of the Sakhalin-2 oil and gas project, allowing him to decide which foreign partners will be allowed to remain invested. Located in Russia’s far east, Sakhalin-2 is responsible for roughly 4% of the world’s LNG market. Its investors include Shell (NYSE: SHEL) and Mitsubishi (OTCMKTS:MMTOF), which owns a 10% stake.

The Wall Street Journal reports that “The move is one of the most drastic responses by the Kremlin so far to the flight of Western companies from Russia in the wake of the country’s invasion of Ukraine in late February.”

Putin is likely to target investors from nations that have sided with Ukraine. While many Western oil producers have made it clear that they intend to continue avoiding Russian business, it is unclear how they will respond to this news. LNG futures are rising today, but investors should watch the sector carefully for further news out of Russia. Any updates could negatively affect the BOIL ETF.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC