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Natural Gas Prices Fluctuate in a Narrow Range

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Up trending range

August natural gas futures contracts rose from the key support level of $2.70 per MMBtu (British thermal units in millions) and closed at $2.72 MMBtu on July 9, 2015. Prices have been fluctuating between the narrow range of $2.70 and $2.90 per MMBtu for almost a month. Rising  inventories and production are influencing natural gas prices.

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Key pivots

Bullish traders could see resistance for natural gas prices at $3 per MMBtu. Prices hit this mark in May 2015. The demand from electric power plants could support natural gas prices. In contrast, bearish traders could see support at $2.50 per MMBtu. Prices hit this mark in April 2015. Oversupply and record stocks will continue to put pressure on gas prices.

The up trending channel suggests that prices could fluctuate between $2.50 MMBtu and $3 MMBtu. Market estimates suggest that natural gas prices could average around $3 per MMBtu in 2015. Natural gas prices are trading below their 20, 30, and 50-day moving averages as of July 10, 2015.

The performance of ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) benefits from rising natural gas prices. Upstream players like Rex Energy (REXX), QEP Resources (QEP), and Contango (MCF) also benefit from rising gas prices. Combined, they account for 2.93% of the Spider Oil and Gas ETF (XOP). These stocks also have a gas production mix that’s more than 59% of their production portfolio.

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