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US Natural Gas Futures: What to Expect

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Key natural gas price drivers  

US natural gas futures increased 6.1% on April 19–26. Prices increased due to the larger-than-expected decline in natural gas inventories. The United States Natural Gas ETF (UNG) and the First Trust Natural Gas ETF (FCG) increased ~4.3% and 1%, respectively, on April 19–26. UNG seeks to track active natural gas futures. FCG aims to track the performance of the index of stocks involved in natural gas exploration and production.

The Vanguard Energy ETF (VDE) and the iShares Global Energy ETF (IXC) increased ~1.4% and ~0.6%, respectively, on April 19–26. VDE aims to follow the performance of an index of energy stocks. IXC aims to track an index of global equities in the energy sector.

Warm weather is expected for the next two weeks, which could pressure natural gas prices in upcoming sessions. The expectation of a rise in US natural gas supplies could also pressure natural gas prices.

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However, a rise in exports could benefit natural gas prices. An unexpected cold weather forecast could also benefit natural gas prices. From a charting perspective, June US natural gas futures contracts were trading above their 100-day, 50-day, and 20-day moving averages on April 26, which suggests that prices could trend higher. 

Forecasts  

US natural gas prices averaged $2.51 per MMBtu (million British thermal units) in 2016 and $2.99 per MMBtu in 2017. According to the EIA, US natural gas prices could average $2.99 per MMBtu in 2018. Record natural gas supplies could restrict the upside for natural gas prices in 2018.

US natural gas prices could average $3.07 per MMBtu in 2019, according to the EIA. The expectation of a rise in natural gas demand and exports could support natural gas prices in 2019.

Read Geopolitical Tensions Push Crude Oil Prices Higher for the latest updates on crude oil.

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