Natural Gas Surges More than 3% Ahead of Inventory Data



Natural gas price rises

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.

Natural gas futures for May delivery increased by 3.16% on April 15, 2015. Yesterday, prices closed at $2.61 per MMBtu (British thermal units in millions). Lower natural gas prices pushed the demand for gas instead of coal. Gas prices surged on Wednesday’s trade. Likewise, gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also rallied. UNG rose by 2.60% and settled at 13.03% at the close of trade.

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Last week, the EIA (U.S. Energy Information Administration) reported that weekly natural gas in storage rose by 15 Bcf (billion cubic feet). This report is due today. The market estimates an increase of about 53 Bcf. The rising inventories will put downward pressure on natural gas prices. This implies sluggish demand in the oversupplied market.

This is the sixth up day for natural gas prices over the last ten days. The average down days fell 0.93% more than the average up days during the last ten trading sessions. Natural gas performed well against all of the commodities. However, WTI (West Texas Intermediate) was the top performer for the second day across all of the commodities. Gas prices fell almost 10% YTD (year-to-date)—driven by oversupply and sluggish demand.

Oil and gas ETFs like the Spider Oil and Gas ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) increased in line with natural gas prices. They rose by 3.73% and 2.39% at end of yesterday’s trade. In contrast, the S&P 500 was trading flat. It was up by 0.51% at the close of trade.

Energy stocks like Energy XXI (EXXI), EP Energy (EPE), and Exco Resources (XCO) gained more than 8% in yesterday’s trade. On average, these stocks have a natural gas production mix greater than 50% of their total production. They account for 4.23% of XOP.


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