Analyzing US Natural Gas Futures and Wall Street’s Performance



Natural gas futures 

US natural gas (DGAZ) (BOIL) futures contracts for December delivery fell 1.6% to $2.96 per MMBtu (million British thermal units) on November 22, 2017. It was the lowest settlement since November 2, 2017. The US market was closed on November 23, 2017, due to the Thanksgiving holiday.

Natural gas prices fell almost 7% in the last five trading days. They fell due to mild weather and oversupply. The less-than-expected fall in US natural gas inventories also weighed on natural (UNG) (UGAZ) gas prices.

Article continues below advertisement

US natural gas performance  

US natural gas has fallen 21.328% YTD (year-to-date). It has fallen due to warmer-than-normal temperatures and excess supplies. Lower natural gas (UNG) (FCG) prices have a negative impact on ETFs and energy producers. The largest ETF that tracks natural gas futures is the VelocityShares 3x Long Natural Gas (UGAZ). It has fallen 80% to 8.9% YTD. Similarly, the largest US natural gas producers (XLE) (VDE) like ExxonMobil (XOM) and Chesapeake Energy (CHK) have fallen 10% and 43% YTD.

Wall Street’s performance  

The NASDAQ (QQQ) and Dow Jones Industrial Average (DIA) rose 2.4% and 0.4%, respectively, in the last five trading sessions. Similarly, the S&P 500 (SPY) (SPX-INDEX) rose 1.3% during this period. The telecommunication (VOX) (IYZ) and consumer discretionary (XLY) (VCR) sectors rose 4.5% and 2.2% in the last five sessions. They supported SPY this week. The materials (XLB), healthcare (XLV), and IT (XLK) sectors have risen 17%, 18%, and 38% YTD. So far, these sectors have supported SPY in 2017.

In this series 

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

Next, we’ll see how the weather drives natural gas prices.


More From Market Realist