uploads/2019/01/oil-pump-promote-crude-oil-3807680-6.jpg

Natural Gas Is Heading for More than a Four-Month Low

By

Updated

Natural gas

On January 30, at 6:05 AM EST, natural gas March futures fell 1.7% from the last closing level. The natural gas March futures were at $2.866 per MMBtu (million British thermal units). If the prices stay at this level until the end of the day, then it would be the lowest closing level for active natural gas futures since September 17. On January 29, natural gas March futures rose 1% and settled at $2.90 per MMBtu. On the same day, the weather forecast suggested colder weather than previously expected for the next two weeks, which might have supported natural gas prices.

Article continues below advertisement

Natural gas prices

In the trailing week, natural gas prices fell 2.3%. Earlier in the trailing week, the weather forecast dragged natural gas prices. The U.S. Energy Information Administration’s inventory data on January 31 might induce a large upside in natural gas prices, which we’ll discuss in Part 3.

On January 29, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) returned -0.1% and 0.2%, respectively, while the S&P 400 Mid-Cap Index (IVOO) was unchanged. The oil and gas constituents of these equity indexes could be impacted by movements in energy commodities.

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

Important price points

On January 29, the natural gas active futures were 5.9%, 21.8%, 15%, and 6.7% below their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. When natural gas is below these key moving averages, it indicates weakness in the prices. On the downside, the closing level of $2.78 would be important for natural gas prices until February 1.

Advertisement

More From Market Realist