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Will US Natural Gas Futures Fall in 3Q17?

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Will US Natural Gas Futures Fall in 3Q17? PART 1 OF 6

US Natural Gas Futures Are near a 4-Week High

Natural gas futures  

September US natural gas (GASL) (FCG) futures contracts rose 1% to $2.92 per MMBtu (million British thermal units) on August 17, 2017.

Prices are near a four-week high due to the following factors:

  • an expectation of warm weather
  • bottom fishing

Natural gas highs and lows  

US natural gas active futures hit $1.68 per MMBtu on March 4, 2016—the lowest level in 17 years. In contrast, prices hit $3.99 per MMBtu on December 28, 2016—the highest level in more than two years. Moves in natural gas prices impact gas producers like EQT (EQT) and Cabot Oil & Gas (COG).

US Natural Gas Futures Are near a 4-Week High

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Natural gas futures tracking ETFs

US natural gas prices have fallen 17.8% YTD (year-to-date) due to mild weather, weak demand, and high natural gas production. Changes in natural gas prices impact 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 74.13% YTD.
  • The United States Natural Gas Fund (UNG) has fallen 29.8% YTD.
  • The VelocityShares 3x Inverse Natural Gas ETN (DGAZ) has risen 69.4% YTD.
  • The ULTRA BLOOMBERG NATURAL GAS ETF (BOIL) has fallen 52.6% YTD.
  • The United States 12 Month Natural Gas Fund (UNL) has fallen 15.9% YTD.

Natural gas and broader market 

The S&P 500 Index (SPY), Dow Jones (DJI), and NASDAQ fell 1.5%, 1.2%, and 1.9%, respectively, on August 17, 2017. The S&P 500 Index (SPX-INDEX), Dow Jones, and NASDAQ have risen 8.5%, 10%, and 15%, respectively, YTD. However, natural gas futures have fallen 17.8% YTD. Likewise, US crude oil prices have fallen 17.7% YTD due to bearish drivers.

Crude oil and natural gas are major contributors for the energy sector. So far, they have been dragging the broader indexes in 2017.

Series overview

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

In the next part of this series, we’ll analyze US weather forecasts.

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