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Natural Gas Prices Slump 9.4% for the Week

Gordon Kristopher - Author
By

Nov. 20 2020, Updated 11:44 a.m. ET

Natural gas prices fall

The US natural gas futures contracts for December delivery fell by 9.4%, reaching $2.15 per MMBtu (British thermal units in millions) through the week from November 16–20. Prices fell due to a warm winter forecast and record natural gas inventories. ETFs like the United States Natural Gas ETF (UNG) fell in the direction of natural gas prices on November 20, 2015, as UNG fell by 4.7% to around $9.0 on the day.

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The latest forecasting model suggests that the lower 48 states of the United States might experience a warm winter during the last few days of November 2015. Warm winter would curb the need for heating. As a result, this also curbs the demand for natural gas and negatively impacts natural gas prices.

Last week, the EIA (U.S. Energy Information Administration) reported that natural gas stockpiles rose by 15 Bcf (billion cubic feet) for the week ending November 13, 2015. The rising natural gas inventory and warm weather estimates dragged natural gas prices for the fourth consecutive day. As a result, prices fell 9% for the week ending November 20, 2015. This is the highest weekly fall since January 2015.

Volatility 

Natural gas prices fell for the seventh time in the last ten trading sessions. During the same period, prices fell by 0.39% more on the average down day than on the average up day. Natural gas futures were the worst performers with respect to other commodities in Friday’s trade. Prices fell by 27.5% YTD (or year-to-date) due to excess supply concerns.

The mammoth slump in natural gas prices impacts the profitability of natural gas producers like Chesapeake Energy (CHK), Antero Resources (AR), Rice Energy (RICE), EXCO Resources (XCO), and Devon Energy (DVN). The uncertainty in the oil and gas market also affects ETFs such as the Guggenheim S&P Equal Weight Energy ETF (RYE) and the First Trust Energy AlphaDEX ETF (FXN).

In this series, we’ll look at natural gas prices and fundamentals. For an in-depth look at oil and gas as well as related companies, sectors, and drivers, please visit Market Realist’s Energy and Power page.

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