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Looking Ahead: What to Expect from US Natural Gas Prices

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Looking Ahead: What to Expect from US Natural Gas Prices PART 1 OF 8

US Natural Gas Prices Fell from a 1-Month High

Natural gas prices 

April natural gas (UGAZ) (FCG) (DGAZ) futures contracts fell 2.7% and settled at $2.9 per MMBtu (million British thermal units) on March 16, 2017. Broader markets like the S&P 500 (SPY) (SPX-INDEX) also fell 0.2% on March 16, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.5% of the S&P 500 as of March 17, 2017.

NYMEX natural gas prices fell from a one-month high due to the following factors:

  • less-than-expected draw in US natural gas inventories last week
  • mild winter weather

However, prices have risen 13% from their three-month low of $2.6 per MMBtu on February 21, 2017. Volatility in natural gas prices impacts natural gas–weighted upstream companies like Rice Energy (RICE), Rex Energy (REXX), EXCO Resources (XCO), and Southwestern Energy (SWN).

US Natural Gas Prices Fell from a 1-Month High

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US natural gas highs in the last 12 months 

US natural gas (UNG) (BOIL) active futures hit $3.99 per MMBtu on December 28, 2016—the highest level in the last 25 months.

Prices rose due to:

As of March 16, 2017, prices were 27.3% below their 12-month highs. Prices fell due to warmer-than-normal weather for this time of the year. For more on the weather, read the next part of the series.

US natural gas lows in the last 12 months

US natural gas prices hit a 17-year low of $1.68 on March 4, 2016, due to mild weather, weak demand, strong supplies, and high inventories. Follow the series for more bearish drivers. As of March 16, 2017, prices have risen 72.6% from their lows in the last 12 months. 

What’s in this series? 

In this series, we’ll look at natural gas inventories, US natural gas rig counts, production, consumption, and some natural gas price forecasts.

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