Natural gas prices
Natural gas prices initially rose in the week to June 19 but fell toward the latter part of the week. Prices closed at $2.77 per MMBtu (million British thermal units) on Thursday, June 18, which is 0.72% higher than last Friday’s close of $2.75 per MMBtu.
Natural gas prices affect the profitability of natural gas producers like Chesapeake Energy (CHK), Devon Energy (DVN), Range Resources (RRC), and QEP Resources (QEP). All these companies are components of the iShares U.S. Energy ETF (IYE) and make up ~3% of the fund.
Price movements this week
Natural gas prices on Monday, June 15, increased by 5% compared to the prior Friday’s price of $2.75 per MMBtu. They settled at $2.889 per MMBtu.
Prices got a boost from warmer weather forecasts. The forecasts also showed that a tropical storm may develop and result in flooding in the Gulf Coast and Oklahoma. This will push prices higher, as the storm could disrupt supplies.
Hotter weather forecasts continued to push prices higher on Tuesday as well. Prices rose ~0.2% to settle at $2.894.
On Wednesday, however, prices fell on speculations about recent demand assumptions due to hotter weather forecasts and whether they would be sufficient to balance the oversupplied natural gas markets. Prices fell 1.3% to close at $2.855 on Wednesday.
On Thursday, prices continued to fall as weather concerns subsided, cancelling the gains seen earlier in the week. Prices fell despite bullish inventory data released by the EIA (U.S. Energy Information Administration). They fell ~3%, and closed at $2.777 per MMBtu on Thursday.
Natural gas prices seemed to continue the mild weakness on Friday as well, as prices were trading around $2.77.
In the next part of this series, we’ll analyze how various natural gas exposed securities performed this week.