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US Natural Gas Prices Trade Close to Key Resistance Level

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Jan. 29 2016, Updated 5:05 p.m. ET

Natural gas price trend

US natural gas prices are trading between $2 per MMBtu (million British thermal units) and $2.30 per MMBtu in January 2016. Prices rallied after testing a 16-year low of $1.7 per MMBtu in December 2015. Weather estimates and inventory are driving natural gas prices.

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Key support

Short covering and cold winter weather could boost natural gas prices. Natural gas prices could see a resistance level at $3 per MMBtu. Prices hit this level in April 2015. Record supplies should drag natural gas prices lower. The next support level for natural gas prices is $1.6 per MMBtu. Prices tested this mark in 1995.

Raymond James—the financial services firm—forecast that US natural gas prices could average around $2 per MMBtu in 2016. The EIA (U.S. Energy Information and Administration) estimates that US natural gas prices could average around $2.65 per MMBtu and $3.22 per MMBtu in 2016 and 2017, respectively. They averaged $2.63 per MMBtu in 2015. The natural gas price chart suggests that gas prices could trade between $2 and $3 per MMBtu in the short term. Fitch ratings suggest that gas prices could average around $2.5 per MMBtu in 2016 and, over the long term, prices could average $3.25 per MMBtu.

Natural gas producers like ConocoPhillips (COP), Cabot Oil & Gas (COG), EQT (EQT), Rice Energy (RICE), Southwestern Energy (SWN) and QEP Resources (QEP) benefit from the recent surge in natural gas prices. Volatility in the energy market affects ETFs like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the Fidelity MSCI Energy ETF (FENY), and the VelocityShares 3x Long Natural Gas ETN (UGAZ).

 

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