uploads/2015/09/NG-chart41.png

Natural Gas Prices Rally for the Fourth Straight Day

By

Updated

Trading range 

Natural gas futures contracts for October delivery show the emergence of a rectangular trading range. Prices have been fluctuating within this channel since August 2015. The consensus of slowing natural gas production is driving natural gas prices.

Article continues below advertisement

Support and resistance 

The consensus of rising natural gas inventory might put downward pressure on natural gas prices. Natural gas could see support at $2.60 per MMBtu (British thermal units in millions). Prices tested this level in June 2015. In contrast, the consensus of warm weather and renewed demand from power plants could support natural gas prices. Prices could see resistance at $3 per MMBtu. Natural gas prices tested this mark in April 2015.

The US natural gas price chart suggests that natural gas prices could fluctuate between $2.60 and $3 per MMBtu in the short term. The EIA (U.S. Energy Information Administration) forecasts that natural gas prices could trade around $2.84 per MMBtu in 2015 and $3.11 per MMBtu in 2016.

The volatility in natural gas prices impacts natural gas producers like Southwestern Energy (SWN), Antero Resources (AR), and Range Resources (RRC). These companies account for 3.02% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is more than 49% of their total production.

Oil and gas ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) are also impacted by the roller coaster ride of natural gas prices.

Advertisement

More From Market Realist