Natural gas futures
February US natural gas (UNG) (FCG) futures contracts rose 1.3% to $2.95 per MMBtu (million British thermal units) on December 29, 2017. Prices are near a four-week high. Prices rose due to forecasts of colder-than-normal weather in the coming weeks. The largest natural gas futures ETF, the VelocityShares 3x Long Natural Gas (UGAZ) rose 2.9% to 72.7 on December 29, 2017.
US natural gas price performance
Natural gas futures (GASL) (BOIL) rose 11.1% on December 22–29, 2017. It was the biggest weekly gain since December 2016. Cold winter forecasts and a rise in natural gas consumption and exports supported prices last week. The fall in US natural gas inventories was in line with the market expectations on December 15–22, which also supported natural gas prices. The EIA released its natural gas inventory report on December 28, 2017. All of these factors could drive US natural prices higher this week.
Higher natural gas (UNG) prices favor energy producers (XOP) (XLE) like Range Resources (RRC), Rice Energy (RICE), and Cabot Oil & Gas (COG). However, US natural gas (UGAZ) futures fell nearly 21% in the last 12 months. High natural gas production and moderate weather pressured natural gas prices during this period.
Wall Street’s performance
The NASDAQ and Dow Jones Industrial Average rose 28.2% and 25.2%, respectively, in 2017. The S&P 500 rose ~19.4% in 2017. It was the biggest annual gain since 2013. Wall Street rose due to the improving US economy and strong US corporate earnings growth.
The IT (XLK), materials (XLB), consumer discretionary (XLY), financials (XLF), and healthcare (XLV) sectors rose more than 20% in 2017. They supported SPY the most in 2017. They will likely drive SPY in 2018.
In this series
In this series, we’ll discuss US natural gas inventories, the natural gas rig count, supply and demand, and some natural gas price forecasts.