Natural Gas Market Is Volatile Due to Weather and Inventory Data
Price channel
January natural gas futures contracts have been trading above the key support levels of $2 per MMBtu (British thermal units in millions) for more than a month as of December 3, 2015. Prices have been trading within a downward trending channel since November 2015. The larger-than-expected fall in the natural gas inventory boosted the natural gas prices.
Key pivots
Record production and a mild winter could push natural gas prices lower. The nearest support for natural gas prices is seen at $2 per MMBtu. Prices hit this level in October 2015. In contrast, lower natural gas prices could boost consumption and benefit natural gas prices. Gas prices could see resistance at $3 per MMBtu. Prices tested this mark in April 2015.
Goldman Sachs (GS) projects that natural gas prices could average $2.7 per MMBtu in 4Q15. The EIA (U.S. Energy Information Administration) forecasts that US natural gas prices could average around $2.69 per MMBtu in 2015 and $3 per MMBtu in 2016. Citigroup estimates that US natural gas prices could average around $2.70 per MMBtu in 2015 and $3 per MMBtu in 2016. Gas prices are trading below the key moving averages. The price chart suggests that natural gas prices could trade lower.
The long-term lower natural gas prices impact US oil and gas producers like EXCO Resources (XCO) Southwestern Energy (SWN), Chesapeake Energy (CHK), and Range Resources (RRC). The uncertainty in the oil and gas market also impacts ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI).
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