Key natural gas price drivers
US natural gas futures decreased 1.6% from April 26 to May 3. Prices decreased due to the larger-than-expected increase in natural gas inventories and mild weather. The United States Natural Gas ETF (UNG) and the First Trust Natural Gas ETF (FCG) decreased ~3.2% and ~3.4%, respectively, from April 26 to May 3. 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. Cabot Oil & Gas (COG), Chesapeake Energy (CHK), and EQT (EQT), natural-gas-weighted stocks, fell ~1.6%, ~3.3%, and ~5.5%, respectively, from April 26 to May 3.
Cooling demand may increase for the next two weeks, which could support natural gas prices in upcoming sessions. The rise in cooling demand is two weeks earlier than the usual. A rise in exports could also benefit natural gas prices.
However, the expectation of a rise in US natural gas supplies could pressure natural gas prices. An unexpected mild weather forecast could also pressure natural gas prices. From a charting perspective, June US natural gas futures contracts were trading below their 20-day, 50-day, and 100-day moving averages on May 3, which suggests that prices could struggle to rise in the short term.
US natural gas prices averaged $2.99 per MMBtu (million British thermal units) in 2017. The EIA estimates that US natural gas prices could average $2.99 per MMBtu in 2018. Record natural gas production 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 the Federal Reserve and US Supplies Affect Crude Oil Prices for the latest updates on crude oil.