What’s Affecting Natural Gas Futures?

December natural gas (UNG) (BOIL) futures contracts trading on NYMEX fell 0.97% to $3.05 per MMBtu (or million British thermal units) on October 26, 2017. November natural gas (UGAZ) (DGAZ) futures contracts fell 0.68% to $2.89 per MMBtu on October 26, 2017. These contracts will expire on October 27, 2017. Prices fell due to lower-than-expected heating demand for natural gas due to the warmer-than-average temperatures.

December natural gas (GASL) (FCG) futures contracts are down 2% in the last five trading sessions. Prices fell due to a rise in natural gas production. Meanwhile, the EIA (or US Energy Information Administration) reported yesterday that US natural gas inventories rose last week.

Prices are down 18% year-to-date. Changes in natural gas prices impact natural gas producers (RYE) (VDE) (XLE) like Gulfport Energy (GPOR), Rex Energy (REXX), and Rice Energy (RICE).

The expectation of a rise in natural gas production could pressure natural gas prices. Similarly, the rise in natural gas inventories above the seasonal average could also weigh on natural gas prices. US weather is likely to be mild for the next two weeks, which could also weigh on natural gas prices.

The NASDAQ (QQQ) fell 0.11% to 6,556.7 on October 26, 2017. In contrast, the Dow Jones Industrial Average Index (DIA) advanced 0.31% to 23,400.86 on the same day. The S&P 500 (SPY) advanced 0.22% to 2,560.4 on October 26, 2017. These three indexes are near record levels. The strong Q3 earnings results are driving Wall Street.

This series covers updates on natural gas inventories, rig counts, natural gas production and consumption, and US natural gas price forecasts.

Next, we’ll analyze how weather influences natural gas prices.