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Will Rise in Natural Gas Prices Continue?

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Natural gas supported CHK and GPOR

On June 11, natural gas July futures rose 1.8% and settled at $2.399 per MMBtu (million British thermal units). On June 11, Chesapeake Energy (CHK) and Gulfport Energy (GPOR) rose 0.5% and 0.6%, respectively. In fact, CHK and GPOR were the only gainers among natural-gas-weighted stocks. On the same day, WTI crude oil futures and the S&P 500 (SPY) Index were almost flat. The gain in natural gas prices might have lifted CHK and GPOR’s stock prices.

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Will the rise continue?

According to Refinitiv data, the total demand in the lower 48 US states for this next week could rise by 2.4 Bcf per day from the expected demand of 79.6 Bcf this week due to warmer temperatures. Next week, natural gas supplies in the US could moderately rise to 96.6 Bcf per day from the expected level of 96.2 Bcf per day this week. These factors might help natural gas prices to sustain its gains.

However, this summer, given a possible rise in the oil rig count, we could see a surge in natural gas supply. Also, the EIA inventory data on June 12 might not help in extending these gains in natural gas prices.

Key technicals

On June 11, the natural gas active futures were 5.2%, 6.7%, 11.1%, and 21.9% below their 20-day, 50-day, 100-day, and 200-day moving averages, respectively. Natural gas below these key moving averages indicates weakness in the prices.

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