Will the Weather Push Natural Gas Prices Higher?



Natural gas prices  

December natural gas (UNG) (BOIL) futures contracts rose 2.4% to $3.05 per MMBtu (million British thermal units) in electronic exchange at 1:07 AM EST on November 6, 2017. In contrast, December E-Mini S&P 500 (SPY) futures contracts fell 0.15% to 2,578.75 in electronic exchange at the same time.

US natural gas futures are at a ten-day high. However, prices have fallen 17.5% year-to-date due to weak demand and a rise in US natural gas production. Changes in natural gas prices impact natural gas producers (XLE) (XOP) like Cabot Oil & Gas (COG), ExxonMobil (XOM), WPX Energy (WPX), and Rice Energy (RICE).

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Weather forecasts  

Some weather forecasts state that the average temperatures in the next two weeks will be colder than average. The west and north-central parts of the US might have colder-than-average temperatures. The colder weather could drive the demand for natural gas and support natural gas (FCG) (GASL) prices. Similarly, NOAA forecast that the temperatures this winter will be 13% colder than last winter across the US.

However, some weather forecasts suggest that the overall weather in the US is expected to be mild for the next two weeks. Similarly, the US National Weather Service estimates that the temperatures will be warmer than average across most of the US this winter.

Nearly 50% of US households use natural gas for heating and cooling. Changes in temperatures impact natural gas demand, which could weigh on US natural gas (UGAZ) (DGAZ) prices.

Changes in the weather impact the demand, inventories, and natural gas prices.


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