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Natural Gas Prices: Buying Opportunity for Natural Gas Traders?

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Part 6
Natural Gas Prices: Buying Opportunity for Natural Gas Traders? PART 6 OF 6

Natural Gas Prices: Buying Opportunity for Natural Gas Traders?

US natural gas inventories and the weather 

For the week ending February 3, 2017, US natural gas inventories are 11.3% lower than the same period in 2016. Falling natural gas inventories will support natural gas (FCG) (UNG) (BOIL) prices. For more on natural gas inventories, read Part 3 and Part 4 of this series.

Expectations of a mild winter could pressure natural gas prices in the short term. For more on natural gas prices and the weather, read Part 2 of this series.

Changes in natural gas prices can impact oil and gas producers’ earnings such as WPX Energy (WPX), Gulfport Energy (GPOR), Southwestern Energy (SWN), and Range Resources (RRC).

Natural Gas Prices: Buying Opportunity for Natural Gas Traders?

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US natural gas prices and moving averages 

March natural gas futures are below their 20-day, 50-day, and 100-day moving averages of $3.1, $3.3, and $3.2 per MMBtu (million British thermal units) as of February 10, 2017. It suggests that prices are experiencing bearish momentum. Fundamental drivers also suggest bearish momentum for natural gas prices in the short term. However, March natural gas futures are above their 200-day moving average of $3 per MMBtu. If natural gas prices fall below the 200-day moving average, we could see a steep fall in natural gas prices.

US natural gas price forecasts  

The EIA (U.S. Energy Information Administration) released its monthly Short-Term Energy Outlook report on February 7, 2017. The EIA estimates that US natural gas prices could average $3.43 per MMBtu in 2017 and $3.70 per MMBtu in 2018.

Previously, it estimated that US natural gas prices could average $3.55 per MMBtu in 2017 and $3.73 per MMBtu in 2018. US natural gas prices averaged $2.51 per MMBtu in 2016 and $2.63 per MMBtu in 2015.

The downward revision in US natural gas prices could pressure natural gas prices in the short term. Meanwhile, President Trump’s proposed energy policy could impact natural gas prices. Read How Could Donald Trump Impact the US Energy Market? to learn more.

The World Bank forecast that US natural gas prices will average $3 per MMBtu in 2017 and $3.50 per MMBtu in 2018.

The International Monetary Fund forecast that US natural gas prices will average $3 per MMBtu in 2017, $3.10 per MMBtu in 2018, and $3.30 per MMBtu in 2019.

Impact 

Higher natural gas prices can have a positive impact on oil and gas producers’ earnings such as Cimarex Energy (XEC) and Gulfport Energy (GPOR).

Read What Can Investors Expect from the Natural Gas Market in 2017? and Could Trump Impact US Natural Gas Production and Consumption for more on the natural gas market outlook in 2017.

Read What Can Investors Expect in the Crude Oil Market in 2017? for analysis on crude oil prices.

For energy-related analysis, visit Market Realist’s Energy and Power page.

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