uploads///NG prices nov

Natural Gas Prices Could Be Weak the Rest of 2016

Gordon Kristopher - Author
By

Nov. 20 2020, Updated 12:42 p.m. ET

US natural gas inventories and weather  

US natural gas inventories are 5.6% above their five-year average. They’re also at record levels. For more on inventories, read Part 3 of this series. The expectation of milder winter could pressure natural gas prices. Record inventories and the expectation of a mild winter could be bearish for natural gas prices.

Volatility in natural gas prices impacts oil and gas producers’ earnings such as Southwestern Energy (SWN) and Memorial Resource Development (MRD).

Article continues below advertisement

US natural gas price forecasts

Aegent Energy Advisors estimates that US natural gas prices won’t exceed $2.92 per MMBtu (million British thermal units) in December 2016. It also estimates that US natural gas prices won’t exceed $3.1 per MMBtu this winter. Weather forecasting models suggest a mild winter in the second half of November 2016. It would pressure natural gas prices.

The EIA forecast that US natural gas prices will average $2.50 per MMBtu in 2016 and $3.12 per MMBtu in 2017. US natural gas prices averaged $2.63 per MMBtu in 2015. 

The World Bank forecast that US natural gas prices will average $2.30 per MMBtu in 2016, $3 per MMBtu in 2017, and $3.50 per MMBtu in 2018.

The International Monetary Fund forecast that US natural gas prices will average $2.30 per MMBtu in 2016, $3 per MMBtu in 2017, $3.10 per MMBtu in 2018, and $3.30 per MMBtu in 2019.

Impact 

Higher natural gas prices can have a positive impact on oil and gas producers’ earnings such as Southwestern Energy (SWN), Cabot Oil & Gas (COG), Range Resources (RRC), and Memorial Resource Development (MRD).

Uncertainty in crude oil and natural gas prices can also impact funds such as the VelocityShares 3x Inverse Natural Gas ETN (DGAZ), the United States Oil ETF (USO), the iShares Global Energy ETF (IXC), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the First Trust ISE-Revere Natural Gas ETF (FCG), and the Direxion Daily Natural Gas Related Bull 3X ETF (GASL).

Read Winter Weather and Inventories Could Impact Natural Gas Prices, Winners and Losers in Energy after the US Election Results, and Will Crude Oil Prices Test 3 Digits Again? for more on natural gas and crude oil price forecasts.

For related analysis, visit Market Realist’s Energy and Power page.

Advertisement

Latest SPDR® S&P Oil & Gas Explor & Prodtn ETF News and Updates

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.