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Why Are Natural Gas Prices Struggling?

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Natural gas prices

On June 5, natural gas July futures fell 1.4% and settled at $2.89 per MMBtu (million British thermal units). On the same day, Southwestern Energy (SWN) and Gulfport Energy (GPOR) fell 1.9% and 1%, respectively. In contrast, Chesapeake Energy (CHK) didn’t change. These three stocks were the underperformers on our list of natural gas–weighted stocks.

On June 5, ETFs that follow natural gas futures, the United States Natural Gas ETF (UNG) and the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) fell 1.3% and 2.6%, respectively.

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Why are natural gas prices struggling?

The National Weather Service expects below-average temperatures in the southeast and northwest parts of the US in the next six to ten days. Cooler temperatures might be behind the 2.4% decline in natural gas prices in the last two trading sessions.

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

Moving averages

On June 5, natural gas active futures closed 1.1%, 4.2%, 2.7%, and 0.5% 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.

However, the 200-day moving average at $2.88 is an important support for natural gas prices. If natural gas prices break below this level, a strong downside in natural gas prices might be possible.

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