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Natural Gas Reached an Eight-Month High: What’s Next?


Nov. 20 2020, Updated 5:06 p.m. ET

Natural gas prices

On September 25, natural gas November futures rose 1% and settled at $3.058 per MMBtu (million British thermal units)—the highest closing level for active natural gas futures since January 30.

In the previous trading session, Cabot Oil & Gas (COG), Antero Resources (AR), and Gulfport Energy (GPOR) rose 0.2%, 0.4%, and 0.6%, respectively, and outperformed other natural gas–weighted stocks.

On September 25, the S&P 500 Index (SPY), the S&P 400 Mid-Cap Index, and the Dow Jones Industrial Average Index (DIA) fell 0.1%, 0.1%, and 0.3%, respectively. The oil and gas constituents of these equity indexes could be impacted by movements in energy commodities.

Natural gas prices could be important to integrated energy stocks like ExxonMobil (XOM) and Chevron (CVX). Their upstream businesses operate with a production mix of ~39% in natural gas.

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Higher natural gas prices

In the trailing week, natural gas November futures rose 5.6%. The expectation of higher demand and inventories below their five-year average might be behind the rise in natural gas prices. In Part 3 of this series, we’ll discuss natural gas inventory levels.

Next week, US natural gas consumption is expected at 76.6 Bcfpd (billion cubic feet per day)—compared to previous estimates of 78 Bcfpd, according to estimates from Reuters analysts. The estimates might be a concern for natural gas’s rise.

Important price points

On September 25, natural gas active futures were 6.9%, 7.1%, 6.7%, and 8% above their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. These moving averages will likely be important support zones for natural gas prices.


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