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Will US Weather Pressure or Support Natural Gas Prices?

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Aug. 14 2017, Published 11:53 a.m. ET

Natural gas prices 

September US natural gas (DGAZ) (GASL) futures contracts rose 0.1% to $2.98 per MMBtu (million British thermal units) in electronic trading at 1:50 AM EST on August 11, 2017. Natural gas prices are near three-week highs.

The United States Natural Gas ETF (UNG), which tracks the performance of US natural gas futures, is near its three-week high. It rose 3.6% on August 10, 2017. The UNG ETF has fallen 11% in the last three months. Likewise, US natural gas futures have fallen 14% in the last three months. Lower natural gas (DGAZ) (UGAZ) prices can have a negative impact on natural gas producers like EQT (EQT), Range Resources (RRC), and Cabot Oil & Gas (COG).

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Weather forecasts 

Temperatures were almost normal to average in the lower 48 states of the US between July 28, 2017, and August 4, 2017.

The EIA (Energy Information Administration) estimates that electricity generation will use less natural gas this summer compared to the previous summer.

Weather forecasting models predict cooler-than-normal temperatures in the central and northern parts of the US this weekend. The western and southern regions of the country may experience warm temperatures in the next week. However, some parts of the western and southern US may get heavy rains next week. Overall, US weather is expected to be mild next week, which could lead to lower-than-expected demand for natural gas in the next seven days.

More than 50% of US households use natural gas for heating and cooling. Changes in demand impact natural gas (BOIL) (GASL) prices. Moves in natural gas prices impact natural gas producers like Range Resources and Cabot Oil & Gas.

Changes in the weather and demand impact US natural gas inventories.

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