Market Overview

Natural Gas Prices Continue To Climb Despite Hurricane Matthew Downgrade

Natural Gas Prices Continue To Climb Despite Hurricane Matthew Downgrade

Natural gas prices are on a tear, following up on last week's strong advance. Prices have been higher for five straight sessions and are now at their highest level in about 22 months.

The front-month natural gas futures are currently at $3.265 per million British thermal units on the NYMEX. This represented the highest since the $3.464 reached on December 19, 2014.

Reflecting the buoyancy in prices, the United States Natural Gas Fund, LP (NYSE: UNG) is currently at $9.35, up 2.63 percent. This marks the highest since the $9.37 hit on November 19, 2015.

Fundamentals Behind The Move?

Fundamentals are driving prices higher, with demand push in the wake of prediction of warm winter weather in October and vibrant consumption outlook predicted by the Energy Information Administration being the recent catalysts.

Related Link: Most Of The Street Is Bullish On Noble Midstream Partners

Some of last week's advance may also be due to fears that Hurricane Matthew will impact supplies. The catastrophe unleashed by the hurricane hit the states of Florida, North Carolina, Georgia and South Carolina after wreaking havoc on its way through the Caribbean. However, since then, the hurricane has been downgraded to a tropical cyclone.

Weathermen predict warmer than usual conditions for this October, with temperatures set to remain 1–3 degrees above normal. This would pep up demand, depleting some of the bloated inventory.

The EIA's annual report on natural gas showed that 2015 saw record natural gas production for the fifth straight year and record consumption levels for the sixth consecutive year. The outlook for 2016 was also upbeat.

Some Stocks Levered To Natural Gas Prices

  • Western Gas Partners, LP (NYSE: WES).
  • Enbridge Inc (USA) (NYSE: ENB).
  • Chesapeake Energy Corporation (NYSE: CHK).
  • EOG Resources Inc (NYSE: EOG).
  • Spectra Energy Corp. (NYSE: SE).
  • Southwestern Energy Company (NYSE: SWN).
  • Range Resources Corp. (NYSE: RRC).

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