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Will Natural Gas Stay above $3?

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Jan. 9 2019, Updated 1:10 p.m. ET

Natural gas

On January 8, natural gas February futures rose 0.8% and settled at $2.96 per million British thermal units. Until January 11, on the upside, the closing level of $3.14 could be important. On January 9, at 6:50 AM CST, natural gas prices crossed the $3 level.

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Will natural gas stay above $3?

In the trailing week, natural gas prices rose just 0.9%. However, the weather forecast suggests warmer weather until January 17, before turning colder. The weather forecast data and the contraction in the negative inventories spread, which we’ll discuss in Part 3, might prevent natural gas from staying over $3 in the short term. In fact, the steady natural gas rig count discussed in the next part might prevent natural gas’s rise.

In the last trading session, the S&P 500 Index (SPY), the S&P 400 Mid-Cap Index (IVOO), and the Dow Jones Industrial Average Index (DIA) rose 1%, 1.7%, and 1.1%, respectively. 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 8, the natural gas active futures were 18.5%, 22.9%, 13.5%, and 5% below their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. Natural gas prices below the key moving averages might indicate weakness.

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