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Natural Gas Prices: Is a Reversal Possible?

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Natural gas futures

On July 19, 2017, natural gas (UNG) (BOIL) August futures closed at $3.07 per MMBtu (million British thermal units), 0.7% below their previous settling price. However, between July 12 and July 19, natural gas futures rose 2.7%.

In the week ended July 19, US crude oil September futures rose 3.6%, and the Energy Select Sector SPDR ETF (XLE) rose 1.9%. Both the S&P 500 Index (SPY) and the S&P 400 Mid-Cap Index (IVOO) rose 1.3%, but the Dow Jones Industrial Average (DIA) rose just 0.5% between July 12 and July 19, 2017. Energy commodities’ being in the green could boost these equity indexes.

In the week ended July 19, 2017, natural gas prices were boosted by warmer weather forecasts, as such an environment helps to reduce the excess supply of natural gas. However, rising rigs are still a concern for natural gas prices.

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Moving averages

The 50-day moving average and the 100-day moving average are strong upside resistance zones for natural gas prices. On July 19, 2017, natural gas active futures closed just 0.1% and 0.2% below these two moving averages, respectively. However, natural gas’s 20-day moving average has been a support zone for natural gas prices since July 14, 2017.

The 50-day moving average is just 1.5% below natural gas futures’ 200-day moving average. The 50-day moving average’s managing to cross above the 200-day moving average would likely further boost natural gas prices.

In the meantime, fundamental factors could reverse natural gas’s recent gains. We’ll discuss some of these factors in the following articles.

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