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Weather Plays a Vital Role in Driving Natural Gas Prices

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Nov. 20 2020, Updated 4:19 p.m. ET

Natural gas prices are almost flat

This series analyzes natural gas prices and fundamentals. For an in-depth fundamental look at oil and gas and related companies, sectors, and drivers, please refer to our Energy and Power page.

NYMEX-traded September natural gas futures fell slightly by 0.35% and settled at $2.80 per MMBtu (British thermal units in millions) on August 5, 2015. Prices were almost flat due to the consensus of rising inventories and mild weather estimates. ETFs like the United States Natural Gas Fund LP ETF (UNG) also fell in the direction of natural gas prices. UNG fell by 0.82% and settled at $13.34 on August 4, 2015.

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The EIA (U.S. Energy Information Administration) will release the natural gas inventory report on Thursday, August 6, 2015, at 10:30 AM EST. The government data showed that natural gas inventories rose by 52 Bcf (billion cubic feet) for the week ending July 24, 2015. The consensus of rising inventories for the week ending July 31, 2015, might put downward pressure on natural gas prices.

Likewise, the consensus of mild weather estimates could also drag natural gas prices lower. Mild weather is expected across several parts of the US for the next week, according to the latest weather updates. Mild weather will curb the air conditioning needs. In turn, it will slow the demand for natural gas prices. It will impact prices.

September natural gas prices fell for the fifth time in the last ten days. Prices fell by 1.32% more on the down days than on the up days, in the last ten trading sessions. Natural gas prices had an average performance in yesterday’s trade. Prices fell by 1.35% YTD (year-to-date)—led by oversupply concerns and rising natural gas stockpiles.

The roller coaster ride of natural gas prices impacts oil and gas producers like Chesapeake Energy (CHK), Antero Resources (AR), and Southwestern Energy (SWN). They account for 2.80% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is greater than 35% of their total production.

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