June natural gas futures’ contract shows an uptrend channel. Prices have been fluctuating between $2.9 MMBtu (British thermal units in millions) and $3.1 MMBtu for the past ten trading sessions. The consensus of mild weather and increasing inventory has been driving natural gas prices.
Bearish traders could see key support at $2.50 per MMBtu. Natural gas prices tested this level in April 2015. Oversupply factors will push natural gas prices lower. In contrast, warmer weather might support natural gas prices. The next resistance is seen at $3.20 per MMBtu. Prices hit this mark in January 2015.
The uptrend channel suggests that prices could fluctuate between $2.70 and $3.10 per MMBtu in the near term. In contrast, the RSI (relative strength index) is overbought territory. Prices could fall from these levels.
Energy ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) benefit from higher gas prices. Oil and gas producing stocks like Rosetta Resources (ROSE), Cimarex Energy (XEC), and Apache (APA) also benefit from rising gas prices. These stocks have a gas production mix that’s greater than 40% of their total production. They account for 3.68% of the Spider Oil and Gas ETF (XOP).