Natural gas futures
On March 13, 2018, natural gas April 2018 futures rose 0.3% and closed at $2.79 per MMBtu (million British thermal units). However, natural gas bulls should be careful around the $2.85 level.
On the same day, Gulfport Energy (GPOR) rose 0.7%, while Southwestern Energy (SWN) was unchanged—upstream stocks with at least a 60% production mix in natural gas. Natural gas tracking ETFs, the United States Natural Gas ETF (UNG) and the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) rose 0.1% and 0.3% in the last trading session.
The EIA’s Drilling Productivity Report was released on March 12, 2018. Based on the report, natural gas production could be at 66,119 million cubic feet per day from the US shale region in April 2018, which is ~32% higher on a year-over-year basis. Based on the EIA’s latest STEO (Short-Term Energy Outlook) report, natural gas’s total consumption will grow 8.8% in the winter season of 2017–2018—compared to 2016–2017. So, natural gas oversupply concerns could rise. In Part 2, we’ll analyze how rising US oil production impacts natural gas supplies.
On March 13, 2018, natural gas active futures were 4.6% above their 20-day moving average. On the same day, natural gas futures were 5.1%, 4.1%, 3.7% less than their 50-day, 100-day, and 200-day moving averages, respectively. The 50-day moving average was 1.4% lower than the 200-day moving average. When the 50-day moving average is below the 200-day moving average, it indicates sustained weakness in natural gas prices.