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Are Natural Gas Prices Set to Rise?

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Nov. 20 2020, Updated 3:58 p.m. ET

Natural gas

On October 25, 2017, natural gas (UNG) (BOIL) (FCG) December futures fell 1.7% and settled at $3.082 per MMBtu (million British thermal units).

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Past five trading sessions

Between October 18 and October 25, 2017, natural gas futures rose 0.6%, while US crude oil (USO) futures fell 0.2%. The fall in oil prices could be contributing to the mixed price performance of US equity indexes. The S&P 500 Index (SPY) fell 0.2%, while the Dow Jones Industrial Average Index (DIA) rose 0.7% during the same period.

The EIA (US Energy Information Administration) natural gas inventory data released last week could have helped natural gas prices rise. (We’ll analyze this in the third part of this series.) Meanwhile, growing signs of a coming reduction in natural gas supplies could make natural gas prices stronger this winter. (We’ll focus on this in the second part of this series.)

Moving averages

On October 25, 2017, natural gas active futures were 0.5%, 1.4%, 1.2%, and 3.8% below their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. On October 25, natural gas futures fell below their 20 and 100 day moving averages. The 50-day moving average was still 2.5% below the 200-day moving average, which shows bearishness in natural gas prices.

However, the onset of an exceptionally cold winter due to La Niña effects, even as inventories fall below their five-year average, could push prices higher, regardless of weak technical indicators.

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