Natural Gas Prices Surge and Could Hit the Next Resistance Level
Crude Oil and Natural Gas Prices: Impacted by Supply Concerns
Natural gas prices rally
July natural gas futures halted its two-day decline and had a massive rally on June 15, 2015. The warmer weather forecast and slowing supplies were the key catalysts. Natural gas prices have been fluctuating between $2.60 and $3 per MMBtu (British thermal units in millions) for the past 30 days. The stockpile report is due on Thursday, June 18. It would be the next key catalyst for natural gas prices.
Resistance and support
The bullish momentum could push natural gas prices to the nearest resistance of $3.20 per MMBtu in the near term. Gas prices hit this level in January 2015. In contrast, the massive stockpile consensus could pull natural gas prices lower. The nearest support for natural gas is seen at $2.50 per MMBtu. Prices tested this level in April 2015.
According to the above chart, natural gas prices could trade between $2.50 and $3 per MMBtu in the short term. Market surveys show that natural gas prices could average around $3 per MMBtu in 2015. The RSI (Relative Strength Index) is in overbought territory. Natural gas prices could fall from these levels.
ETFs—like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG)—benefited from increasing natural gas prices. The prices also benefit upstream players like Carrizo Oil and Gas (CRZO), Occidental Petroleum (OXY), and EOG Resources (EOG). They account for 2.88% of the Spider Oil and Gas ETF (XOP). Their production portfolios have a 41% natural gas production mix.
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