September natural gas futures contracts trading in NYMEX are trading close to the resistance of $2.90 per MMBtu (British thermal units in millions). Prices settled at $2.84 per MMBtu as of August 10, 2015. The warm weather forecast is influencing natural gas prices this week.
Key support and resistance
Bullish traders could see resistance at $3 per MMBtu. Prices tested this level in April 2015. Warm weather and the demand from power plants could boost natural gas prices. In contrast, the consensus the rising natural gas stockpile could drag natural gas prices lower. The next support for gas prices is seen at $2.60 per MMBtu. Prices tested this level in June 2015.
The rectangular trading range suggests that prices could fluctuate between $2.60 and $3 per MMBtu in the near term. Market surveys project that natural gas prices could average around $2.70 per MMBtu in 2015 and $3 per MMBtu in 2016.
Rising natural gas prices also benefit oil and gas producers like EQT (EQT), Energen (EGN), and Cimarex (XEC). Combined, they account for 3.60% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is more than 59% of their production portfolio.