Natural Gas: Is a Fall Unavoidable?
On September 27, 2017, natural gas (UNG) (BOIL) November futures rose 1.8% and closed at $3.06 per MMBtu (million British thermal units). Between September 20 and 27, 2017, natural gas November futures fell 2.8%. During this time period, US crude oil (USO) (USL) active futures rose 2.9%. The S&P 500 (SPY) was flat, while the Dow Jones Industrial Average (DIA) fell 0.3%. Energy prices can affect these equity indexes.
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What’s affecting natural gas prices?
Early last week, natural gas inventories rising above market expectations affected natural gas prices. Moreover, US crude oil prices above $50 could pose a threat to natural gas prices, which we’ll discuss in the second part of this series.
Additionally, based on the Climate Prediction Center’s weather outlook report, released September 21, 2017, the probability of above-normal temperatures in the United States between October and December 2017 has increased. This increase could curb natural gas demand for the first two months of the 2017–2018 winter season and bring about renewed weakness in natural gas prices.
On September 27, 2017, natural gas active futures closed 1.6%, 3.6%, and 1.5% above their 20-, 50-, and 100-day moving averages, respectively. Also, natural gas was just 1% below its 200-day moving average. However, its 50-day moving average was still 4.4% below the 200-day moving average. The difference was almost unchanged last week, which could mean natural gas prices are still not out of the woods.