US Natural Gas Futures Near 3-Week High: What’s Next?

September natural gas (UNG) (DGAZ) futures contracts trading on the NYMEX rose 3.5% to $2.98 per MMBtu (million British thermal units) on August 10, 2017.

Prices are near three-week highs due to the following factors:

• warm weather
• short covering
• a less-than-expected rise in US natural gas inventories between July 28, 2017, and August 4, 2017

Higher natural gas prices can have a positive impact on natural gas producers like Rice Energy (RICE), Gulfport Energy (GPOR), Southwestern Energy (SWN), and WPX Energy (WPX).

Natural gas (FCG) (UGAZ) futures 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 two years.

Natural gas (BOIL) (GASL) futures have risen 7.4% in the last five trading sessions. Bullish drivers for natural gas futures include the following:

• expectations that US natural gas inventories will slow down between August 4 and August 11
• bullish momentum in the S&P 500 Index (SPY) (SPX-INDEX)
• a rise in US natural gas exports

US natural gas futures have fallen 16% YTD (year-to-date) due to mild weather and strong inventory. Bearish drivers for natural gas futures include the following:

• Monthly US natural gas production hit a ten-month high.
• Monthly US natural gas consumption hit a two-year low.
• The US crude oil and natural gas rig count rose more than 100% year-over-year.

Will natural gas bulls overshadow the bears? Read this series for more details on natural gas drivers. Moves in natural gas prices affect gas producers like Rice Energy and Southwestern Energy.

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