Rectangular price channel
September natural gas futures contracts rose for the second day from the key support of $2.60 per MMBtu (British thermal units in millions) on August 26, 2015. Prices have been trading within a rectangular price channel for more than eight weeks. The inventory and weather forecast are influencing natural gas prices.
The pessimistic sentiments and rising stockpile consensus could drag natural gas price lower. Natural gas prices could see support at $2.60 per MMBtu. Prices tested this level in June 2015. In contrast, warm weather could boost natural gas prices. Resistance for natural gas prices is seen at $3 per MMBtu. Prices hit this mark in April 2015.
The trading range suggests that natural gas prices could fluctuate between $2.60 and $3 per MMBtu in the short term. Market surveys project that natural gas prices could average around $2.70 per MMBtu in 2015 and $3 per MMBtu in 2016.
The rise in natural gas prices benefits oil and gas producers like Range Resources (RRC), Gulfport Energy (GPOR), and Chesapeake Energy (CHK). They account for 3.22% of the SPDR Oil and Gas ETF (XOP). These companies’ natural gas production mix is more than 49% of their total production.