Inventory Data Are Influencing Natural Gas Prices
Price channel
NYMEX-traded September natural gas futures contracts fell for the first time in the last four days. Prices fell after testing the key resistance of $2.90 per MMBtu (British thermal units in millions) on July 30, 2015. Gas prices have been fluctuating between $2.70 and $2.90 per MMBtu for more than a month. The rising natural gas inventory might continue to impact natural gas prices this week.
Support and resistance
The pessimistic sentiments could drag natural gas prices lower. They might test the support of $2.50 per MMBtu. Prices tested this level in April 2015. The record natural gas inventory and oversupply concerns will negatively impact natural gas prices. In contrast, demand from power plants and the warm weather forecast could support natural gas prices. The next resistance for natural gas prices is seen at $3 per MMBtu. Prices tested this mark in May 2015.
Bank of America Merrill Lynch (BAML) estimates that natural gas prices could average around $2.85 per MMBtu in 2015. The natural gas price chart suggests that gas prices could fluctuate between $2.60 and $3 per MMBtu in the near term.
The performance of ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) fell due to lower natural gas prices. They also impact natural gas producers like QEP Resources (QEP), Gulfport Resources (GPOR), and EQT (EQT). These companies account for 3.46% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is more than 59% of their total production.
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