July natural gas futures are trading close to the key support level. They settled at $2.72 per MMbtu (British thermal units in millions) on June 23, 2015. Prices have been fluctuating between $2.60 and $3 per MMBtu for the almost three months. The consensus of below normal weather and the rising gas stockpile are influencing natural gas prices.
Key support and resistance
The warmer weather consensus could push natural gas prices to the nearest resistance of $3.20 per MMBtu. Gas prices hit this level in January 2015. The rising consumption from power plants could support natural gas prices. In contrast, cooler weather and the record stockpile could drive natural gas to the next support of $2.50 per MMBtu. Prices tested this level in April 2015.
According to the natural gas charts, gas prices are expected to fluctuate between $2.50 and $3 per MMBtu levels. Societe Generale forecasts that natural gas prices could fluctuate between $2.50 and $3 per MMBtu through October 2015. July natural gas futures contracts are trading below their 20 and 50-day moving average.
ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) are affected by falling natural gas prices. They also negatively impact oil and gas players like Occidental Petroleum (OXY), Energen (EGN), and EOG Resources (EOG). They account for 2.58% of the Spider Oil and Gas ETF (XOP). For these stocks, the total production has a 41% gas production mix.