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Natural Gas Prices Trading Close to Psychological Levels

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Trading range 

Natural gas futures contracts on the NYMEX (New York Mercantile Exchange) are trading close to key psychological levels at $2.30 per MMBtu (British thermal units in millions). Prices have been oscillating between $2.10 and $2.30 per MMBtu for the last five trading sessions. The consensus of a fall in natural gas inventory could boost natural gas prices.

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Support and resistance

Bottom fishing and short covering could boost natural gas prices. The next resistance for natural gas prices is seen at $3 per MMBtu. Prices hit this level in April 2015. On the other hand, weak demand could drag natural gas prices lower. The next support for natural gas prices is seen at $2 per MMBtu. Prices tested this mark in October 2015.

Natural gas prices are trading below the 20-day, 50-day, and 100-day moving averages as of November 30, 2015. The downward trending channel suggests that US gas prices could trade between $2 and $2.40 per MMBtu in the near term. The EIA (U.S. Energy Information Administration) estimates that gas prices could average around $2.69 per MMBtu in 2015 and $3 per MMBtu in 2016.

The consensus of higher natural gas prices in 2016 could benefit natural gas producers such as Rice Energy (RICE), Cabot Oil & Gas (COG), Newfield Exploration (NFX), and Range Resources (RRC). The volatility in the energy market also affects ETFs such as the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI).

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