Natural Gas Prices Are Trading in a Narrow Range

Natural Gas Market: Inventory and Rig Count Data

(Continued from Prior Part)

Trading range

Natural gas futures contracts for September delivery rose from the key support of $2.70 per MMBtu (British thermal units in millions) for the second day in a row. Prices have been trading between 2.70 per MMBtu and $2.90 per MMBtu for more than two months. Inventory data and weather estimates are influencing natural gas prices.

Support and resistance

The long-term oversupply concerns could drag natural gas prices lower. The key support for natural gas prices is seen at $2.60 per MMBtu. Prices hit this mark in June 2015. In contrast, warm weather could push natural gas prices higher. The nearest resistance for natural gas prices is seen at $3 per MMBtu. Prices hit this mark in April 2015.

Natural gas prices could average around $2.85 per MMBtu in 2015, according to the forecast from Bank of America Merrill Lynch (BAML). The natural gas price chart suggests that gas prices could fluctuate between $2.60 and $3 per MMBtu in the short term.

The recent natural gas price rally benefits ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG).

They also benefit US gas producers like Gulfport Energy (GPOR), Chesapeake Energy (CHK), and Antero Resources (AR). These companies account for 3.23% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is greater than 59% of their total production.

Browse this series on Market Realist:

• Part 1 - Natural Gas Prices Rise Due to Inventory Data

• Part 2 - EIA’s Natural Gas Report Benefits Natural Gas Prices

• Part 3 - Will the Rig Count and Natural Gas Prices Mirror Each Other?