Natural gas price movement
Natural gas futures contracts for November delivery fell for the second day. Prices fell slightly by 0.94% and settled at $2.43 per MMBtu (British thermal units in millions) on Friday, October 16, 2015. Natural gas prices fell on weak demand cues due to a mild weather forecast.
Gas-tracking ETFs such as the United States Natural Gas ETF (UNG) moved in the direction of natural gas prices on Friday, October 16, 2015. UNG fell by 1.4% and settled at $11.15 at close of trade.
The latest updates from the meteorological department suggest that mild weather could be experienced across the lower 48 states of the United States over the next week. Mild weather will curb heating demand in the winter season, negatively influencing natural gas prices.
The fall in natural gas prices will impact US upstream players such as WPX Energy (WPX), Chesapeake Energy (CHK), Magnum Hunter Resources (MHR), and EXCO Resources (XCO). These companies’ natural gas production mixes are greater than 59% of their total production portfolios.
On October 16, 2015, the US CFTC (Commodity Futures Trading Commission) released its COT (Commitment for Traders) report. The COT report showed that hedge funds reduced their short and long positions for the week ending October 13, 2015. Hedge funds hold 270,000 long positions, compared with 88,000 short positions for the same period.
Open interest fell by 30,000 contracts to 1,646,000 for the week ending October 13, 2015, compared with the previous week. Meanwhile, natural gas prices fell by 15% YTD (year-to-date) due to the rising inventory.
In this series, we’ll analyze natural gas prices and fundamentals. For an in-depth look at oil and gas companies, sectors, and key drivers, please refer to Market Realist’s Energy and Power page.