uploads///Natural Gas Prices

Inconclusive weather forecasts control natural gas prices

By

Dec. 4 2020, Updated 10:52 a.m. ET

Natural gas price movement

Natural gas prices continued their declining trend from last week due to mild weather forecasts on the East Coast from December 13 through December 22. The week started off with prices falling 5% to close at $3.595 on Monday, which is the lowest close in six weeks.

However, prices rebounded on Tuesday after Commodity Weather Group called for below normal temperatures in the eastern half of the US in January and February 2015. Prices jumped 1.6% on this news, and closed at $3.652 on Tuesday. On Wednesday, prices continued to advance on this news. Prices jumped 1.5% to close at $3.706.

Article continues below advertisement

Despite a bullish inventory report released by the EIA on Thursday, prices dropped as weather forecasts turned milder after natgasweather.com noted that “the cold Arctic air will remain confined to far northern Canada and also where they are not tracking through, temperature anomalies are running 10-20 F warmer than normal, such as over Texas and the central US.”

Prices closed at $3.634 on Thursday.

Key stocks and ETFs

Since the weather is the major driver of natural gas prices, investors can get an idea of how prices will likely move in the short term. These prices in turn drive short-term movements in stock prices of natural gas producers like Encana Corp. (ECA), QEP Resources (QEP), Ultra Petroleum (UPL), and WPX Energy (WPX).

Plus, since many of these companies are components of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), these trends also affect the ETF as well.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.