Natural gas’s implied volatility

Yesterday, natural gas’s implied volatility was 28.9%, 4.7% above its 15-day moving average. It has fallen ~10.2% in the last week, while active futures have been almost flat. Since February, natural gas’s prices and implied volatility have been diverging.

Where Natural Gas Could Head Next Week

Price forecast

Based on natural gas’s implied volatility of 28.9% and assuming a normal distribution of prices, natural gas futures could close between $2.26 and $2.42 per MMBtu (million British thermal units) 68.0% of the time until June 20. Yesterday, natural gas July futures fell 2.6% to $2.325 per MMBtu.

Impact on ETFs, stocks, and the broader market

These price limits could be important for ETFs that follow natural gas futures. In the last week, the ProShares Ultra Bloomberg Natural Gas ETF (BOIL) has fallen 0.1%, while the United States Natural Gas ETF (UNG) has fallen 0.2%. These ETFs invest in natural gas futures. If natural gas falls to $2.26, a new multiyear low, UNG and BOIL could be impacted.

Similarly, natural gas–weighted stocks such as Southwestern Energy (SWN), Chesapeake Energy (CHK), Range Resources (RRC), and Antero Resources (AR) are sensitive to changes in natural gas prices. Broader market indexes such as the S&P 500 (SPY) and the Dow Jones Industrial Average (DIA) can also be impacted by changes in energy commodities.

Latest articles

Today, Slack (WORK) opened 4.5% higher after MKM Partners analyst Rohit Kulkarni gave Slack stock a "buy" rating with a target price of $40.

Pure Storage shares have risen more than 15% today. The company announced its second-quarter results after the markets closed on Wednesday.

Nordstrom (JWN) stock was up 16% as of 11:50 AM today after it reported better-than-expected earnings for the second quarter of fiscal 2019.

Last month, four automakers, including Ford, made a voluntary deal with California to make cars cleaner and more fuel efficient. Trump isn't happy with the deal.

GameStop (GME) shares rose 8% in early market trading today. The company laid off about 120 employees as part of its restructuring process.

Today, citing German business publication Manager Magazin, Reuters reported that Volkswagen CEO Herbert Diess is interested in a stake in Tesla.