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Will US Natural Gas Futures Fall Next Week?

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Natural gas futures 

September US natural gas (UNG) (UGAZ) (DGAZ) futures contracts rose 1.8% and closed at $2.97 per MMBtu (million British thermal units) on July 27, 2017.

US natural gas prices rose due to the following:

  • There was a lower-than-expected rise in natural gas inventories on July 14–21, 2017.
  • There was an expectation for warmer weather in the summer.

However, prices have fallen 2% in the last five trading sessions. Prices have fallen 12% in the last three months. Lower natural gas prices have a negative impact on gas producers like Southwestern Energy (SWN), Rice Energy (RICE), Exco Resources (XCO), and Antero Resources (AR).

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Natural gas price drivers next week 

Natural gas prices are near a four-month low. The following events could drive natural gas prices next week:

  • Warmer-than-normal weather is expected in the southern parts of the US during the next week. It would support natural gas futures.
  • An expectation of slowing natural gas inventories on July 21–28, 2017, could help natural gas prices.
  • Slowing weekly natural gas production and improving weekly demand could help natural gas prices.
  • The near-record S&P 500 Index (SPY) (SPX-INDEX) could support energy demand and energy prices.
  • A rise in US natural gas exports could benefit natural gas prices.

Natural gas highs and lows 

NYMEX natural gas prices hit $1.68 per MMBtu on March 4, 2016—the lowest level in 17 years. In contrast, prices hit $3.99 per MMBtu on December 28, 2016—the highest level in more than 24 months.

September natural gas futures are at 20-day moving averages of $2.96 per MMBtu as of July 27, 2017. However, they’re below their 50-day, 100-day, and 200-day moving averages as of July 27, 2017. It suggests that natural gas prices could be range bound. Moves in natural gas prices impact gas producers like Exco Resources and Antero Resources.

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

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