October natural gas futures contracts are trading just above the nearest resistance level of $2.70 per MMBtu (British thermal units in millions). Gas prices have been fluctuating within the narrow range of $2.60–$2.75 per MMBtu since the last week of August 2015. Weather and inventory estimates are driving natural gas prices.
The long-term oversupply concerns and record inventory could drag natural gas prices lower. Natural gas prices could see support at $2.60 per MMBtu. Prices tested this level in June 2015. The consensus of warm weather forecasts could drive natural gas prices higher. The next resistance for natural gas prices is seen at $3 per MMBtu. Prices hit this mark in April 2015.
The trading channel suggests that natural gas 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.
Upstream producers like EXCO Resources (XCO), Range Resources (RRC), and Gulfport Energy (GPOR) benefit from rising natural gas prices. Combined, they account for 3.30% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is more than 49% of their production portfolio.