Natural gas futures
On January 16, 2018, natural gas’s (UNG) (FCG) February 2018 futures fell 2.2% and settled at $3.13 per MMBtu (million British thermal unit). The warm weather forecasts could be behind the fall in natural gas prices. They could fall further if the weather turns warmer.
In the past few trading sessions prior to the last trading session, bullish weather patterns and a large fall in natural gas inventory supported natural gas prices. In the trailing week, natural gas prices rose 7%. On January 12, 2018, natural gas futures were at their highest closing level since November 13, 2017. That same day, natural gas’s implied volatility rose 15.3% to 56.6%, its highest level since December 28, 2015. Higher implied volatility could point to a potential large move in natural gas prices.
In Part 3 of this series, we’ll look at natural gas inventory data. We’ll focus on natural gas supplies in Part 2. In the seven calendar days to January 16, 2018, US crude oil (USO) futures rose 1.2%. That gain in oil prices could benefit the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) more than the large gain in natural gas prices over that period.
On January 16, 2018, natural gas active futures were 10.6%, 6.8%, 6.4%, and 4.2% above their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. But the 50-day moving average was 2.7% less than the 200-day moving average. That could be bearish for natural gas prices.