Natural gas price movement
Natural gas for April futures contracts closed at $2.839 per MMBtu (British thermal units in millions) on Friday, March 6, 2015. Gas prices tested the highs of February 26, 2015. This was the sixth down day in the past ten days. There have been 0.17% more average down days than up days over the last ten trading sessions.
In this series, we’ll take a close look at natural gas prices. To learn more about the fundamental drivers of natural gas and the related companies and sectors, check out our Energy and Power page.
Natural gas trades flat
On March 6, April gas futures settled at the day’s high, down marginally by 0.07%. The volume for the day decreased by 52,366 contracts from the previous day. The total traded volume was at 106,199 contracts. Natural gas prices are in a long-term downward trend, driven by estimates of a huge supply outweighing demand from mid-November 2014.
Natural gas prices saw extreme volatility led by a bulls and bears clash in February 2015. Bears pushed the prices lower due to oversupply factors and a less-than-expected natural gas storage drop. However, bulls supported the rise in prices led by estimates of colder weather.
On March 5, the EIA (Energy Information Administration) reported that weekly natural gas dropped by 228 Bcf (billion cubic feet) more than the estimates. This supported the rise in prices, and prices settled at 2.6% up for the day. The next day saw gas prices trade flat with forecasts of warmer weather, paving the way to a lower demand for gas in the short term.
The EIA will release its next natural gas storage report on March 12, 2015.
An increase or decrease in natural gas prices is important for gas producers as prices impact their margins. Some of these gas producers are Chevron Corporation (CVX), EOG Resources (EOG), and Southwestern Energy (SWN). They also affect the margins of natural gas ETFs such as the United States Natural Gas Fund LP (UNG) and the VelocityShares 3X Long Natural Gas ETN (UGAZ).