Natural Gas Jumps on Winter Demand (Image courtesy of Getty Image Bank/CCL)
SEOUL, Nov. 17 (Korea Bizwire) — Natural gas prices have surged to their highest level in nearly three years, lifting related exchange-traded notes (ETNs) while exposing South Korean retail investors to mounting losses after many bet on the market moving in the opposite direction.
Between Nov. 1 and 14, nine of the ten best-performing ETNs in Korea were leveraged products tied to rising U.S. natural gas futures, according to data from the Korea Exchange. The N2 Leveraged Natural Gas Futures ETN, for instance, jumped 24.4 percent over the period, with similar gains recorded by comparable offerings from KB and Shinhan.
U.S. natural gas for December delivery closed at $4.646 per MMBtu on Nov. 13, up 13 percent from the end of October and the highest since December 2022. Analysts attribute the rise to tightening winter inventories and concerns over insufficient European storage heading into peak heating season.
Yet South Korean individual investors — who often gravitate toward high-risk, short-term trades — have been accumulating inverse ETNs that move in the opposite direction of natural gas prices. This month, retail buyers purchased 22.5 billion won (US$17 million) of Samsung’s 2x inverse natural gas ETN alone. Other inverse products from KB and Meritz also saw sizable inflows.
Those bets have quickly turned sour. Several inverse ETNs have fallen around 17 to 19 percent this month as prices continued to climb.
Analysts warn that further losses may be likely. Beyond winter heating demand, the rapid expansion of energy-intensive artificial intelligence data centers is expected to boost natural gas consumption. “ChatGPT uses ten times the electricity of a typical search query,” said Choi Jin-young of Daishin Securities. “Natural gas demand could grow explosively.”
Forecasts for next year remain mixed: Some analysts see prices climbing toward $7–8 per MMBtu in the second half of 2025, while others caution that the recent rally appears overstretched and vulnerable to short-term correction, particularly if weather patterns shift.
Natural gas ETNs are among the most volatile retail products in Korea, and because they invest in futures, investors must also absorb rollover costs — factors regulators and analysts say warrant greater caution.
Ashley Song (ashley@koreabizwire.com)
