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Natural Gas Struggles in a Narrow Range: Last 5 Trading Sessions

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Jul. 8 2015, Updated 9:05 a.m. ET

Narrow trading channel

Natural gas futures contracts for August delivery settled closer to the key support level of $2.70 MMBtu (British thermal units in millions) as of July 1, 2015. Prices have been fluctuating between $2.70 and $2.90 per MMBtu for the last 20 trading sessions. They’re trading in a narrow range. The warmer weather forecast and rising gas stocks are influencing natural gas prices.

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Key pivots

The bearish momentum could push natural gas prices to the key support of $2.50 per MMBtu. Prices hit this mark in April 2015. Cooler weather and rising gas stocks could drag natural gas lower. In contrast, demand from electric power plants could support natural gas prices. The next resistance is seen at $3.20 per MMBtu. Prices tested this level in January 2015.

Natural gas charts suggest that prices could fluctuate between $2.40 MMBtu and $3.20 MMBtu in the near term. Likewise, market surveys suggest that natural gas prices could trade between $2.50 and $3 per MMBtu by October 2015. Gas prices are below their 20, 50, and 100-day moving averages as of July 1, 2015.

The performance of ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) are impacted by falling natural gas prices. They also impact oil and gas producers like Contango (MCF), Comstock Resources (CRK), and Magnum Hunter (MHR). Combined, they account for 2.69% of the Spider Oil and Gas ETF (XOP). These companies have natural gas production mix that’s more than 59% of their total production.

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