Natural Gas: More Downside Risk?



Natural gas prices

On November 22, natural gas (UNG) January futures fell 1.6% and closed at $3.059 per MMBtu (million British thermal units). On the same day, even after a fall in natural gas inventories according to the EIA (US Energy Information Administration) data, natural gas prices fell. In Part 3 of this series, we’ll discuss the EIA’s natural gas inventory data.

Moreover, the rise in oil prices could threaten natural gas prices, as we’ll discuss in the next part of this series. Between November 15 and 22, natural gas futures fell 3.8% while US crude oil (USO) active futures rose 4.5%. The S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 1.3% and 1.1% over this period. Oil’s gains could be more relevant to these equity indexes than natural gas’s losses.

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Moving averages

On November 22, natural gas active futures were 2.2%, 0.8%, and 1.5% below their 20-, 50-, and 200-day moving averages, respectively. On the same day, natural gas prices were just 0.1% above their 100-day moving average. However, the 50-day moving average was 0.7% below the 200-day moving average—all of which is bearish for natural gas prices.


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