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How Are Natural Gas Prices Reacting to the Sinking Dollar?

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Natural gas prices rise with the falling US dollar

On March 17, 2016, NYMEX natural gas futures rose 3.5% to close at $1.94 per MMBtu. Since March 15, natural gas prices have risen approximately 9%, as the dollar index has fallen around 1.8% over the same period. The PowerShares DB Commodity Index Tracking ETF (DBC) has risen 2.8% over the same period.

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Important technical point for natural gas prices

The price level of $1.95 is an immediate resistance level for natural gas futures. This is 38.2% lower than the high of $2.49 from January 8, 2016. However, it is higher than the low of $1.61 from March 4, 2016. Natural gas is currently trading 6.7% below its 100-day moving average and 8.4% above its 20-day moving average.

Natural gas ETF benchmark

The United States Natural Gas Fund (UNG) rose 3.5% on March 17. On the same day, UNG was trading 15% below its 100-day moving average but 8% above its 20-day moving average. The graph above shows the performance of UNG compared to that of the PowerShares DB US Dollar Index Bullish Fund (UUP) over the last year.

Stocks with a high production mix in natural gas

Upstream stocks operating with a production mix of at least 80% in natural gas fell an average of 2% on March 17. Cabot Oil & Gas (COG), EQT Corporation (EQT), and Rice Energy (RICE) fell 0.78%, 0.25%, and 0.69%, respectively. COG, EQT, and RICE operate with production mixes of 93.9%, 90.7%, and 99.3% in natural gas, respectively.

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