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Will US Natural Gas Futures Test 2016 High?

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Will US Natural Gas Futures Test 2016 High? PART 1 OF 8

US Natural Gas Futures Are near 2-Month High: What’s Next?

Natural gas futures 

June natural gas (GASL) (FCG) (UNG) futures contracts fell 1.3% and settled at $3.19 per MMBtu (million British thermal units) on May 4, 2017. The S&P 500 (SPY) (SPX-INDEX) rose 0.06% on May 4, 2017. Oil and gas are major parts of the energy sector. The energy sector accounted for ~6.3% of the S&P 500 as of April 28, 2017.

US natural gas futures fell due to a larger-than-expected rise in US natural gas inventories and mild weather last week. However, NYMEX natural gas prices have risen ~22% after hitting a three-month low on February 24, 2017, due to the rise in natural gas exports to Mexico and the fall in natural gas inventories in 1Q17. Moves in natural gas prices affect natural-gas-weighted upstream companies such as Southwestern Energy (SWN), EQT (EQT), Range Resources (RRC), and Memorial Resource Development (MRD).

US Natural Gas Futures Are near 2-Month High: What’s Next?

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Natural gas highs in the last 15 months  

NYMEX natural gas (DGAZ) (UGAZ) active futures hit $3.99 per MMBtu on December 28, 2016. It was the highest level in more than two years. Prices rose due to the following factors:

As of May 4, 2017, prices were 20% below their December 2016 high. They fell due to warmer-than-normal weather for this time of year. For more on how the weather impacted natural gas prices, read the next part of this series.

Natural gas lows in the last 15 months 

NYMEX natural gas prices hit a 17-year low of $1.68 per MMBtu on March 4, 2016, due to mild weather, weak demand, strong supplies, and high inventories. We’ll cover more bearish drivers in the rest of this series. As of May 4, 2017, prices have risen 90.5% from their lows on March 4, 2016. They have risen ~10.2% in the last 12 months.

What’s in this series? 

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

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