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Analyzing US Natural Gas Futures and the S&P 500

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Natural gas futures  

February US natural gas (GASL) (UNG) futures contracts rose 6.1% to $3.08 per MMBtu (million British thermal units) on January 11, 2018. It’s the highest settlement since November 29, 2017. Prices sky-rocketed due to cold winter forecasts and the record US natural gas withdrawal last week.

The VelocityShares 3x Long Natural Gas (UGAZ) increased 12.8% to 76.6 on January 11, 2018. It’s the largest natural gas futures ETF.

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US natural gas price performance 

US natural gas (DGAZ) (FCG) futures rose 7.1% on January 4–11, 2018. Prices rose due to the record withdrawal in natural gas inventories, cold weather forecasts, and the expectation of a rise in natural gas exports and demand.

US weather and inventories have been the most significant drivers of natural gas prices this week. Any bullish weather report could boost prices (UNG) in the coming weeks. February US natural gas futures fell 12.4% in the last 12 months due to mild weather, high natural gas production, and weak natural gas demand.

Lower natural gas (BOIL) prices have a negative impact on energy producers (PXI) (XLE) like Stone Energy (SGY) and EP Energy (EPE).

Wall Street’s performance  

The NASDAQ (QQQ) rose 0.81% to 7,211.7, while the Dow Jones Industrial Average (DIA) rose 0.81% to 25,574.7, on January 11, 2018. The S&P 500 (SPY) rose 0.70% to 2,767.5 on the same day. All three of the indices closed at record levels on January 11, 2018. Wall Street (VIX) hit a record partly due to the rise in oil prices, which boosted energy (VDE) (XOP) stocks on January 11, 2018.

The S&P 500 rose 1.6% in the last five trading sessions. The industrials (XLI) (ITA), consumer discretionary (XLY) (VCR), financials (XLF) (VFH), and energy (IEZ) (RYE) sectors rose more than 2% in the last five trading sessions. They supported SPY during this period. They could drive SPY in the coming weeks.

In this series 

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

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