Natural Gas Speculators Might Focus on Upcoming EIA Inventory Data



Demand drivers

LCI Energy estimates suggest that daily consumption from industrial plants and electrical power plants increased. Demand from electrical power plants will be the key driver of natural gas prices in 2015.

In the US, a cold weather forecast for the rest of April 2015 will support natural gas prices. Chilly weather will spike the demand for natural gas in the short term. The increase in demand implies that the inventory level might drop.

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EIA will release the natural gas inventory report tomorrow

The EIA (U.S. Energy Information Administration) will release the natural gas storage report tomorrow at 10:30 AM EST. The market estimates an increase of 87 Bcf (billion cubic feet). Last week, the EIA reported that weekly natural gas increased to 1,539 Bcf from 1,476 Bcf for the week ending April 10. The weekly inventories increased by 63 Bcf—the highest since November 2014. The current inventories are 81% more than the estimates last year, but 9.5% below the five-year average. Record inventories, weak demand, and growing supplies will put pressure on natural gas prices. Bullish speculators might focus on the EIA’s inventory report in order to unwind their long positions in the near term.

Oil and gas ETFs like the Spider Oil and Gas (XOP) and the Energy Select Sector SPDR ETF (XLE) moved in the opposite direction from natural gas prices. Lower natural prices impact gas producers like WPX Energy (WPX), Antero Resources (AR), and EXCO Resources (XCO). These companies have a natural gas production mix that’s more than 75% of their production portfolio. They account for 3.01% of XOP.


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