US natural gas inventories and the weather
For the week ending February 17, 2017, US natural gas inventories are 10% lower than the same period in 2016. Falling natural gas inventories will support natural gas (BOIL) (UGAZ) (UNG) (FCG) prices. For more on natural gas inventories, read Part 3 and Part 4 of this series.
Expectations of a cold winter could also support natural gas prices in the short term. For more on natural gas prices and the weather, read Part 2 of this series.
US natural gas prices and moving averages
April natural gas futures are below their 20-day, 50-day, 100-day, and 200-day moving averages of $2.8, $3.1, $3.1, and $3 per MMBtu (million British thermal units) as of February 27, 2017. It suggests that prices are experiencing bearish momentum. Fundamental drivers also suggest bearish momentum for natural gas prices in the short term. As a result, we could see a steep fall in natural gas prices.
US natural gas price forecasts
Analytics firm Kensho expects that US natural gas prices could trade as low as $2.25 per MMBtu in the short term. It’s ~20% lower than the current prices of $2.7 per MMBtu as of February 27, 2017. A mild summer could be the key bearish driver for natural gas prices in 2017.
The EIA (U.S. Energy Information Administration) estimates that US natural gas prices could average $3.43 per MMBtu in 2017 and $3.70 per MMBtu in 2018. US natural gas prices averaged $2.51 per MMBtu in 2016 and $2.63 per MMBtu in 2015.
Meanwhile, President Trump’s proposed energy policy could impact natural gas prices. Read How Could Donald Trump Impact the US Energy Market? to learn more.
The World Bank forecast that US natural gas prices will average $3 per MMBtu in 2017 and $3.50 per MMBtu in 2018.
The International Monetary Fund forecast that US natural gas prices will average $3 per MMBtu in 2017, $3.10 per MMBtu in 2018, and $3.30 per MMBtu in 2019.
Read What Can Investors Expect from the Natural Gas Market in 2017? and Could Trump Impact US Natural Gas Production and Consumption for more on the natural gas market outlook in 2017.
Read What Can Investors Expect in the Crude Oil Market in 2017? for analysis on crude oil prices.
For energy-related analysis, visit Market Realist’s Energy and Power page.