Natural Gas Prices Trade near the Next Support



Price trends 

US natural gas futures contracts for January delivery are making a series of lower lows and lower highs. Natural gas prices are into the epic bear market. Prices tested the intraday low of $1.73 per MMBtu (British thermal units in millions) on December 17, 2015. Warm weather forecasts are dragging natural gas prices.

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Support and resistance 

Demand could be the real catalyst for the natural gas market. A cold winter could increase the heating demand. Natural gas prices could see resistance at $3 per MMBtu. Prices tested this mark in April 2015. On the other hand, record production and record inventory could drag natural gas prices lower. Natural gas prices could see support at $1.60 per MMBtu. Prices hit this level in 1995.

Goldman Sachs suggests that prices could trade around $2.85 in 2016. Barclays suggests that US natural gas prices could average $2.65 per MMBtu and $2.45 in the first two quarters of 2016. The natural gas price charts suggest that prices could trend lower. Prices are also trading below the 20-day, 50-day, and 100-day moving averages as of December 17, 2015. It suggests that prices could trend lower.

Historically low natural gas prices will impact upstream players’ revenue like Southwestern Energy (SWN), Rice Energy (RICE), Chesapeake Energy (CHK), and Range Resources (RRC).

ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also impacted by the ups and downs in the oil and gas market.


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