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Will US Natural Gas Futures Rise or Fall in 2018?

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Moving averages 

February US natural gas (UGAZ) futures contracts are above their 20-day and 50-day moving averages on January 11, 2018. However, February US natural gas (DGAZ) futures contracts are below their 100-day moving averages on January 11, 2018. Prices rose 7.1% on January 4–11, 2018. The bullish momentum could support natural gas (UNG) prices next week. 

Higher gas (GASL) prices have a positive impact on energy producers’ (VDE) (XLE) profitability like EXCO Resources (XCO), Antero Resources (AR), and Cabot Oil & Gas (COG).

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Natural gas futures contracts 

The premium of February 2018 natural gas futures over March 2018 natural gas futures contracts was at $0.16 per MMBtu (million British thermal units) on January 11, 2018. It’s the highest level since January 2011. It suggests that natural gas demand could rise immediately, which could push natural gas prices higher.

What’s driving natural gas futures?  

A bullish weather report and massive withdrawal in US natural gas inventories compared to the historical averages could boost natural gas prices next week. However, any rise in natural gas production could pressure prices (UNG).

EIA’s forecast  

US natural gas prices averaged $2.51 per MMBtu in 2016 and $2.99 in 2017. The EIA released its monthly STEO (Short-Term Energy Outlook) report on January 9, 2018. The EIA forecast that US natural gas prices will average $2.88 per MMBtu in 2018, which is 7.6% lower than the previous estimates in December 2017. Record natural gas production will pressure natural gas prices in 2018.

It also expects US natural gas prices to average $2.92 per MMBtu in 2019. The expectation of a rise in US natural gas demand and exports will support natural gas prices in 2019.

Read Key Bearish Factors for Crude Oil Prices in 2018 for the latest updates on crude oil.

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