August natural gas futures are showing the emergence of an upwards trending channel. Prices are fluctuating between $2.60 and $3 per MMBtu (British thermal units in millions) within this channel. Mild weather estimates and warmer weather forecasts are swinging natural gas prices.
Support and resistance
The current momentum suggests that natural gas prices could fluctuate in either direction. Bullish traders could see resistance at $3.20 per MMBtu. Gas prices hit this mark in January 2015. The renewed demand from power plants could support natural gas prices. In contrast, mild weather could push natural gas prices lower. The next support for natural gas is seen at $2.50 per MMBtu. Prices tested this level in April 2015.
According to the charts, natural gas prices could fluctuate between $2.40 MMbtu and $3.20 MMbtu in the short term. Societe Generale estimates that natural gas prices could fluctuate between $2.50 and $3 per MMBtu through October 2015. August natural gas futures 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 negatively affected by falling natural gas prices. They also impact energy producers like Range Resources (RRC), Energen (EGN), and EOG Resources (EOG). Combined, they account for 2.47% of the Spider Oil and Gas ETF (XOP). For these stocks, the total production has at 41% of the natural gas production mix.