Natural gas prices
On May 15, natural gas June futures fell 2.2% and settled at $2.60 per MMBtu (million British thermal units)—4.4% above the lowest closing level for active natural gas futures since June 6, 2016. On May 15, Southwestern Energy (SWN) was unchanged, while Chesapeake Energy (CHK) fell 2.3%. They were the underperformers among natural gas–weighted stocks. The stocks also ignored a 0.4% and 0.6% rise in US crude oil and the S&P 500 Index (SPY).
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Has natural gas maintained the recovery?
On May 14, the natural gas supply in the lower 48 US states was at 88.4 Bcf (billion cubic feet) per day—1.3 Bcf per day less than the two-week high on May 12, according to Refinitiv data. Next week, the natural gas demand is expected to be at 76.1 Bcf per day—1.8 Bcf per day less than the previous forecast. With natural gas production just 2.2% less than its record high and demand shrinking in this shoulder season, natural gas prices’ recovery might fade out. On May 7, natural gas’s implied volatility was 20.7%, which is ~25.2% below its 2019 average. The lower implied volatility indicates that market participants don’t expect sharp movement in natural gas prices. An additional downside or slow movement in natural gas prices this month would likely impact Southwest Energy and Chesapeake Energy’s second-quarter earnings.
On May 15, the natural gas active futures were 2.8%, 8.3%, and 16.3% below their 50-day, 100-day, and 200-day moving averages, respectively. On the same day, the prices were 1.6% above the 20-day moving—an important support zone for natural gas prices.