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Why Natural Gas Prices Retreated on May 29

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Natural gas prices

On May 29, natural gas July futures fell 2% and settled at $2.90 per MMBtu (million British thermal units). On the same date, Cabot Oil & Gas (COG), Range Resources (RRC), and Chesapeake Energy (CHK) fell 2.4%, 0.7%, and 0.5%, respectively—the underperformers on our list of natural gas–weighted stocks.

On May 29, ETFs that follow natural gas futures, the United States Natural Gas ETF (UNG) and the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) fell 2.1% and 4.3%, respectively.

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Why natural gas prices retreated?

Natural gas July futures settled at ~$2.96 per MMBtu on May 25—the highest closing level since January 31. The price drop on May 29 tracked the sharp sell-off in equity markets on the same day. A mix of political, economic, and trade fears have been battering currency, debt, commodity, and equity markets across the globe.

A rising oil rig count could increase the natural gas output—a drag for natural gas prices, which we’ll discuss in Part 2. In Part 3, we’ll focus on natural gas inventory levels.

Moving averages

On May 29, natural gas active futures closed 3%, 5.6%, 3.2%, and 0.9% above their 20, 50, 100, and 200-day moving averages, respectively. Natural gas active futures trading above all of the moving averages is a bullish signal for prices.

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