Natural gas prices
Natural gas futures for January delivery rose 0.8% and were trading at $3.72 per MMBtu (million British thermal units) in electronic trading at 4:05 AM EST on December 9, 2016. Prices rose due to cold weather forecasts and the bullish US natural gas inventory report. Prices hit a 2016 and two-year high.
However, Donald Trump’s victory in the US presidential election could pressure natural gas prices. Read Winners and Losers in Energy after the US Election Results and How Could Donald Trump Impact the US Energy Market? to learn more. For more on weather and prices, read Part 1 of this series.
Volatility in natural gas prices can impact natural gas producers’ earnings such as Southwestern Energy (SWN), WPX Energy (WPX), Cabot Oil & Gas (COG), Range Resources (RRC), and Gulfport Energy (GPOR).
NYMEX natural gas highs in 2016
NYMEX natural gas active futures hit a 24-month high at $3.7 per MMBtu on December 8, 2016, due to the following:
- cold weather forecasts
- a fall in US natural gas inventories
- slowing natural gas production
Prices rose 29% year-to-date. In the last six months, prices rose 38% due to the hot summer, short covering, and traders watching for possible impacts from La Niña.
US natural gas lows in 2016
NYMEX natural gas prices hit a 17-year low of $1.64 on March 3, 2016, due to mild weather, weak demand, strong supplies, and high inventories. As of December 8, prices rose 126% from their lows in 2016.
Prices rose 34% in the last 12 months. Higher natural gas prices usually have a positive impact on natural gas producers’ earnings such as Southwestern Energy, WPX Energy, Cabot Oil & Gas, Range Resources, and Gulfport Energy.
The ups and downs in crude oil and natural gas prices can also impact funds such as the Direxion Daily Natural Gas Related Bull 3x ETF (GASL), the VelocityShares 3x Inverse Natural Gas ETN (DGAZ), the United States Natural Gas ETF (UNG), the Fidelity MSCI Energy ETF (FENY), the PowerShares DWA Energy Momentum ETF (PXI), the United States Oil ETF (USO), and the First Trust ISE-Revere Natural Gas ETF (FCG).
Next, we’ll take a look at US natural gas inventories.