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Inventories Keep Pressure on Natural Gas Prices

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Natural gas price

After seeing the biggest weekly gain since February last week, natural gas prices plunged in the week from April 20–24. Natural gas prices closed at $2.53 MMBtu (British thermal units in millions) on Thursday, April 23. This was ~4% lower than last Friday’s close of $2.634.

A decrease in prices is negative for natural gas producers like Southwest Energy (SWN), ECA (ECA), Cabot Oil and Gas (COG), and EQT (EQT). All of these companies are part of the iShares Global Energy ETF (IXC). They account for 1.8% of IXC.

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Price movements this week

Prices on Monday, April 17 fell by 3.7%—compared to last Friday’s price of $2.634. They settled at $2.536 on Monday.

On Tuesday, prices increased by 1.5% to close at $2.575. Prices rose due to colder weather forecasts by MDA Weather Services. It forecasted below normal temperatures in the US Midwest and Northeast regions as well as the Mid-Atlantic states. Prices also rose on market speculation that low prices will spur coal-to-gas switching by electricity generators.

Prices continued to increase the next day, as updated weather forecasts by MDA Weather Services called for below normal temperatures in the US Northeast and Great Lakes region through May 1. Prices rose 1.2% to close at $2.606 on Wednesday.

Responding to a more-than-expected increase in natural gas inventories in an EIA report, prices fell ~3% on Thursday to settle at $2.531. Read more about last week’s changes in inventories in the Part 1 of this series.

Prices seemed to recover on Friday. They were trading close to $2.543.

In the next part of this series, we’ll discuss last week’s natural gas production and consumption trends.

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