NYMEX-traded natural gas futures contracts for August delivery fell for the first time in the last four days. Prices fell from the key resistance level of $2.90 per MMBtu (British thermal units in millions) as of July 14, 2015. Gas prices have been fluctuating in a narrow range of $2.70–$2.90 per MMBtu for the past month. The rising inventories and warmer weather forecast are impacting natural gas prices.
Support and resistance
The consensus of rising natural gas stocks and mild weather estimates could push natural gas prices lower. The next support for natural gas prices is seen at $2.50 per MMBtu. Gas prices tested this mark in April 2015. In contrast, the renewed demand from electric power plants and warmer weather could support natural gas prices. The key resistance for August natural gas futures is seen at $3 per MMBtu. Prices tested this level in May 2015.
The natural gas price chart suggests that prices could fluctuate between $2.50 MMBtu and $3 MMBtu. August natural gas prices could average around $3.25 per MMBtu in 2H15, according to the market consensus.
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 negatively impact natural gas producers like Gulfport Energy (GPOR), Magnum Hunter Resources (MHR), and Contango (MCF). They account for 2.88% of the Spider Oil and Gas ETF (XOP). These companies also have a natural gas production mix that’s more than 59% of their production portfolio.