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Natural Gas Plunged due to Massive Inventory Data

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Natural gas price slumps

Below is our natural gas price fundamental analysis. For an in-depth look at natural gas and related companies, sectors, and drivers, please refer to our Energy and Power page.

May natural gas futures fell by 4.47% and settled at $2.52 per MMBtu (British thermal units in millions) on April 9, 2015. Natural gas prices plunged because of the massive inventory buildup—due to weak demand. Warm weather estimates caused demand to decrease. The benchmark tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also dropped by 1.42% at the close of trade. UNG settled at $13.18 on April 9.

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Yesterday, the weekly US natural gas in storage report was released by the EIA (U.S. Energy Information Administration). The natural gas in storage increased by 15 Bcf (billion cubic feet). This was more than the market estimates of 11 Bcf. Last week, the weekly natural gas in storage fell by 18 Bcf.

Natural gas declined for the fifth day over the last ten trading sessions. Prices fell 1.56% more on the average down days than the average up days over the same period. All of the commodities performed better than natural gas in yesterday’s trade. Brent crude oil had the best performance. Natural gas prices followed the deep downtrend—led by the massive surplus of gas. Prices fell almost 12% YTD (year-to-date).

Lower natural gas prices generally put pressure on oil and gas ETFs’ performance. However, ETFs like the Spider Oil and Gas ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) diverged from natural gas’ price movement. They rose by 1.83% and 1.60% in yesterday’s trade.

Integrated oil and gas companies like Chevron (CVX), ExxonMobil (XOM), and Occidental Petroleum (OXY) closed marginally higher in yesterday’s trade. They account for 3.27% of XOP. On average, these companies’ production portfolios have a natural gas production mix of 41%.

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