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Will NYMEX Natural Gas Futures Recover from a 3-Month Low?

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Natural gas futures 

NYMEX natural gas (UNG) (FCG) futures contracts for July delivery were flat at $2.89 per MMBtu (million British thermal units) on June 22, 2017. Prices are at a three-month low. US natural gas prices fell due the following:

  • mild weather
  • a larger-than-expected rise in natural gas inventories on June 9–16, 2017
  • a rise in monthly natural gas production in March 2017

Lower natural gas prices have a negative impact on natural gas–weighted stocks. Natural gas producers like EQT (EQT), Gulfport Energy (GPOR), and Range Resources (RRC) have fallen 8.3%, 16.2%, and 20%, respectively, in the last three months.

Oil and gas are major parts of the energy sector. The S&P 500 (SPY) (SPX-INDEX) has risen 8.7% YTD (year-to-date). The US energy sector has fallen 13.5% YTD. Bearish momentum in the energy sector is limiting upside for the S&P 500.

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Natural gas highs and lows in the last 15 months  

US natural gas active futures hit $3.99 per MMBtu on December 28, 2016—the highest level in more than 24 months. As of June 22, 2017, prices were 27.6% below their 2016 high.

US natural gas active futures hit a 17-year low of $1.68 per MMBtu on March 4, 2016. As of June 22, 2017, prices have risen 72% from lows in March 2016.

July natural gas futures are below their 20-day, 50-day, 100-day, and 200-day moving averages of $3, $3.2, $3.21, and $3.22 per MMBtu (million British thermal units) as of June 22, 2017. It suggests more pain for natural gas prices next week.

In the next part of the series, we’ll analyze US weather.

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