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Supply and Demand Could Drive Natural Gas Futures in September

PART:
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Part 2
Supply and Demand Could Drive Natural Gas Futures in September PART 2 OF 6

Hurricane Harvey Could Impact Natural Gas Prices

Natural gas prices 

October natural gas (UGAZ) (DGAZ) futures contracts trading in NYMEX fell 0.2% to $2.91 per MMBtu (million British thermal units) in electronic trading at 2:00 AM EST on August 28, 2017. Prices are near a three-week high.

Natural gas futures tracking ETFs 

US natural gas prices have fallen 18.1% YTD (year-to-date) due to high natural gas supplies, sluggish demand, and mild weather. Volatility in natural gas prices influences natural gas stocks and ETFs. The YTD returns for the top five natural gas ETFs, ranked by assets under management, are mentioned below:

  • The VelocityShares 3x Long Natural Gas ETN (UGAZ) has fallen 74.7% YTD.
  • The United States Natural Gas Fund (UNG) has fallen 30.5% YTD.
  • The VelocityShares 3x Inverse Natural Gas ETN (DGAZ) has risen 72.1% YTD.
  • The ULTRA BLOOMBERG NATURAL GAS ETF (BOIL) has fallen 53.7% YTD.
  • The United States 12 Month Natural Gas Fund (UNL) has fallen 16% YTD.

Hurricane Harvey Could Impact Natural Gas Prices

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Hurricane Harvey and weather forecasts 

Hurricane Harvey hit the Gulf Coast region on August 26, 2017. The hurricane led to torrential rain and massive floods. It could lead to cooler-than-normal weather for the next week. Some traders think that Hurricane Harvey could be the most powerful hurricane in more than a decade.

The preliminary estimates suggest that more than 250,000 homes in Texas were without electricity on August 26, 2017. The US weather is expected to be mild during the next week and in September 2017.

More than 50% of US households use natural gas for heating and cooling purposes. Mild temperatures suggest that natural gas demand could be weak over the next week. A fall in demand could pressure US natural gas (BOIL) (UNG) (GASL) prices. Lower natural gas prices have a negative impact on natural gas producers like Rex Energy (REXX), Rice Energy (RICE), Exco Resources (XCO), and Antero Resources (AR).

Changes in the weather and demand impact US natural gas inventories.

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