Natural gas price trends
January natural gas futures contracts hit a 16-year low for the week ending December 18, 2015. Prices have been holding above the key level of $1.70 per MMBtu (British thermal units in millions) for three straight days as of December 18, 2015. Weather and demand are the key catalysts for the natural gas market.
Long-term pessimistic sentiments could push natural gas prices lower. The next support for natural gas prices is seen at $1.60 per MMBtu. Prices tested this mark in 1995. In contrast, technical buying and short covering could boost natural gas demand. The next resistance for natural gas prices is $3 per MMBtu. Prices hit this level in April 2015.
The EIA (U.S. Energy Information and Administration) projects that gas prices could average around $2.67 per MMBtu in 2015 and $2.88 per MMBtu in 2016. The natural gas price chart and moving averages suggest that prices could trend lower.
The relative strength index suggests that natural gas prices are oversold. They are trading close to historic lows. In other words, prices could trade higher. Barclays projects that US natural gas prices could average $2.65 and $2.45 per MMBtu in the first two quarters of 2016.
Oil and gas producers such as Rice Energy (RICE), Chesapeake Energy (CHK), Southwestern Energy (SWN), and Range Resources (RRC) will be affected by record low natural gas prices. Oil and gas ETFs such as the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also affected by volatility in the energy market.