Natural gas outperforms the commodity market (Part 1 of 2)
Volatility
for April natural gas futures
Natural gas April futures trading on NYMEX (New York Mercantile Exchange) closed at $2.732 per MMBtu (British thermal units in millions) on March 10, 2015. Prices tested the highs on March 2 and 3, 2015. This was the fifth up day in the past ten days. The average down days ended 1.03% more than the up days over the last ten trading sessions.
We’ll cover natural gas price action in this series. To learn more about the fundamental drivers of natural gas and the related companies and sectors, visit our Energy and Power page.
Natural gas rallied
April gas futures settled at the day’s high at the close of trade. They increased by 2.02% on Tuesday, March 10, 2015. The volume for the day totaled 81,809 contracts from the last trading day. The volume declined by 81,809 contracts on March 10, 2015, from the previous trading day. Massive natural gas production and sluggish demand led to a decline in natural gas prices from the highs in November 2014. Prices dropped more than 39% since November 2014.
February 2015 saw clashes between the bulls and bears. This caused natural gas prices to fluctuate. Bulls supported colder weather for a rise in gas prices. In contrast, bears pushed gas prices lower due to gas glut.
On March 6, 2015, the EIA (U.S. Energy Information Administration) reported that the weekly gas in storage dropped by 228 Bcf (billion cubic feet) more than the forecast. As a result, natural gas prices increased. Prices were up by 2.6% for the day. The next day, natural gas prices declined more than 5% due to concerns about massive production. However, on March 10, prices rose due estimates of bullish inventory withdrawals.
The EIA will release the next natural gas storage report on March 12, 2015.
Natural gas price oscillations impact the performance of key ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG). They also affect key stocks like Rex Energy Corp. (REXX), Ultra Petroleum Corp. (UPL), and Anadarko Petroleum (APC).
Continue to Part 2
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