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Will US Natural Gas Futures Fall from Current Levels?

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Aug. 15 2017, Updated 10:36 a.m. ET

Moving averages of US natural gas futures

September natural gas futures are above their 20-day and 50-day moving averages of $2.91 and $2.96 per MMBtu (million British thermal units), respectively, as of August 10, 2017. However, September natural gas futures are below their 100-day and 200-day moving averages of $3.15 and $3.19 per MMBtu, respectively, as of August 10, 2017.

Moving averages suggest US natural gas (UNG) (GASL) (FCG) prices could trade between $2.9 and $3.2 per MMBtu in the short term. Moves in natural gas prices can impact the earnings of oil and gas producers like Cimarex Energy (XEC), WPX Energy (WPX), Southwestern Energy (SWN), and EQT (EQT).

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US natural gas price forecasts

The EIA (U.S. Energy Information Administration) released its Short-Term Energy Outlook report on August 8, 2017. It estimates that US natural gas prices could average $3.06 per MMBtu in 2017, 1.4% lower than previous estimates. The EIA also estimates that prices could average $3.29 per MMBtu in 2018, 3.2% below previous estimates.

US natural gas prices averaged $2.51 per MMBtu in 2016 and $2.63 per MMBtu in 2015. The World Bank estimates that prices could average $3.17 per MMBtu in 2017 and $3.60 per MMBtu in 2018.

Impact 

The rise in US crude oil production would add to US natural gas supplies. The rise in associated natural gas production would pressure natural gas prices to as low as $1.75 per MMBtu in the next three to six months, according to Robert Raymond of RCH Energy.

President Trump’s energy plans could also increase US natural gas production, which would likely have a negative impact on natural gas (DGAZ) (UGAZ) prices.

Read Crude Oil: Price Forecasts and Hedge Funds’ Position for more information on crude oil price forecasts.

Check out Decoding Global Crude Oil Demand and Supply Drivers and Will the OPEC and Non-OPEC Meeting Drive Crude Oil Futures? for more information.

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