Natural gas price action
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.
November natural gas futures contracts trading in NYMEX rose by 1.50% and settled at $2.67 per MMBtu (British thermal units in millions) on Monday, September 28, 2015. Prices rose due to cold weather estimates. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also followed the price path of natural gas prices in Friday’s trade. UNG rose by 1.57% and settled at $12.27 on September 28, 2015.
The October natural gas futures contracts fell by 0.10% and closed at $2.56 per MMBtu. They expired on September 28, 2015. It’s the lowest settlement for the front-month natural gas futures contracts since April 2015.
The latest forecasting models suggest that cold weather could be experienced across the Midwest regions of the US over the next month. Cold weather drives the heating needs in order to keep room temperatures at normal levels. It will drive the demand for natural gas from electric power plants and support natural gas prices.
The EIA (U.S. Energy Information Administration) will publish the weekly natural gas report on October 1, 2015. Last week, the EIA reported that the natural gas stockpile rose by 106 Bcf (billion cubic feet) for the week ending September 18, 2015. The consensus of the rising inventory will weigh on natural gas prices.
This is the fifth up day for natural gas prices in the last ten trading sessions. Prices rose by 0.30% more on the up days than on the down days, during the same period. Natural gas prices fared well across the other commodities in yesterday’s trade. Prices fell more than 6.50% YTD (year-to-date) due to oversupply concerns.
The natural gas prices’ long-term downward trend impacts energy producers like WPX Energy (WPX), Cabot Oil & Gas (COG), and EXCO Resources (XCO). They account for 2.68% of the SPDR Oil and Gas ETF (XOP). These companies’ natural gas production mix is greater than 86% of their production portfolio.