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US Natural Gas Futures Collapsed, S&P 500 Fell

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Sep. 22 2017, Published 9:45 a.m. ET

Natural gas futures  

October US natural gas (UNG) (FCG) futures contracts fell 4.5% to $2.95 per MMBtu (million British thermal units) on September 21, 2017. Prices fell due to the larger-than-expected rise in US natural gas inventories on September 8–15, 2017. The EIA released the data on September 21, 2017.

The seasonal summer demand for natural gas ended this week, which also weighed on natural gas prices. Prices are near a two-week low. Lower natural gas prices have a negative impact on oil and gas producers’ (XLE) (XOP) earnings like Southwestern Energy (SWN), Gulfport Energy (GPOR), Cabot Oil & Gas (COG), and Newfield Exploration (NFX).

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Highs and lows  

US natural gas (BOIL) (GASL) active futures prices hit $1.68 per MMBtu on March 4, 2016—the lowest level in more than a decade. In contrast, prices hit $3.99 per MMBtu on December 28, 2016—the highest level in almost three years.

US natural gas price performance

US natural gas (DGAZ) (UGAZ) futures have fallen 17.11% year-to-date due to mild US weather and a rise in US natural gas production.

Crude oil (USO) (UCO) and natural gas–producing companies (XES) (IEZ) are major parts of the energy sector. The energy sector contributed to ~5.9% of the S&P 500 (SPY) on September 21, 2017.

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S&P 500 and Dow Jones fell from record levels 

The S&P 500 (SPY) fell 0.3% and closed at 2,500.6 on September 21, 2017. Likewise, the Dow Jones Industrial Average Index (DIA) fell 0.24% to 22,359.23 on the same day. The S&P 500 and the Dow Jones Industrial Average closed at 2,508.24 and 22,412.59 on September 20, 2017.

The S&P 500 has risen 11.7% YTD (year-to-date). The IT (XLK) (VGT), healthcare (XLV), and materials (XLB) sectors have risen 25%, 19%, and 14%, respectively, YTD. So far, these sectors have been driving the S&P 500 in 2017.

However, the energy (RYE) (VDE) and telecommunication (VOX) (IYZ) sectors have fallen 10.7% and 9.7%, respectively, YTD. So far, these sectors have been dragging the S&P 500 in 2017.

Series overview  

In this series, we’ll discuss US natural gas inventories, natural gas rig counts, US natural gas production and consumption, and some natural gas price forecasts.

In the next part of this series, we’ll analyze how the weather could drive natural gas prices.

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