Futures spread

On March 26, the natural gas futures for May 2019 closed at a premium of ~$0.15 to the May 2020 futures. On March 19, the futures spread was at a premium of $0.27. On March 19–26, the natural gas May futures fell 4.2%.

Futures Spread: Natural Gas’s Bullish Sentiments Fall

Bullish sentiments declining

The market sentiment toward natural gas’s demand-supply situation is reflected in the futures spread. The futures spread and natural gas prices tend to move in the same direction.

In the trailing week, the futures spread’s premium contracted and natural gas prices fell over four percentage points. The outage at Cheniere Energy’s Sabine Pass liquefied natural gas export terminal in Louisiana and the forecast for warmer weather might drag the spread’s premium more.

Energy stocks

The natural gas May futures fell 4.2% in the trailing week. During this period, natural gas–weighted stocks Antero Resources (AR), EQT (EQT), Cabot Oil & Gas (COG), and Range Resources (RRC) returned -0.4%, 0.4%, 1.7%, and 2.8%, respectively, and underperformed their peers. The remaining natural gas–weighted stocks ended in the green during this period.

Forward curve

As of March 26, the natural gas futures contracts for delivery between May and August were priced in ascending order, which is a negative development for ETFs that follow natural gas futures including the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) and the United States Natural Gas ETF (UNG).

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