By Suzanne McGee

Investors have been piling into an exchange-traded fund (ETF) designed to track U.S. natural gas prices, in spite of the commodity's dismal performance in 2023.

The U.S. Natural Gas Fund's (UNG) price, tied to the performance of futures contracts on the commodity, has plunged 60.7% so far this year, falling 27% in November alone.

Nevertheless, the ETF has drawn inflows totaling nearly $220 million over the course of the last month, according to data from LSEG Lipper. That is the equivalent of about a quarter of the $946 million in inflows the fund saw in the first 10 months of the year.

Analysts said the drop in the ETF's price came alongside a fall in the price of natural gas sparked by milder than usual weather across the United States in recent weeks.

Investors betting that more typical weather patterns will kick in later in the season are likely taking advantage of the ETF's price slump, said Stacey Morris, head of energy research at VettaFi.

"I think people are just playing the prices right now" in hopes that traditional seasonal pricing patterns will kick in, she said.

Natural gas prices fell about 22% in November, the single largest monthly percentage drop since a 40% decline in January. Front-month gas futures for January delivery on the New York Mercantile Exchange were 0.5% higher, hitting $2.815 per million British thermal units (mmBtu)on the New York Mercantile Exchange as of early Friday afternoon.

The U.S. Energy Information Administration (EIA) on Thursday said utilities added a surprise 10 billion cubic feet (bcf) of gas into storage during the week ended Nov. 24, when warmer-than-usual weather kept heating demand low.

Morris noted that UNG saw big inflows in February when the commodity's price and that of the ETF had a similar swoon.

(Reporting by Suzanne McGee; Editing by Ira Iosebashvili and Emelia Sithole-Matarise)