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Natural Gas Prices Decline Marginally ahead of Inventory Data

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Natural gas price movement

This series analyzes natural gas prices and fundamentals. For an in-depth look at natural gas and related companies, sectors, and drivers, please refer to our Energy and Power page.

The July natural gas futures contract fell marginally by 0.25% on Wednesday—led by the consensus of increasing natural gas inventory. Prices dropped for the third day and closed at $2.81 per MMBtu (British thermal units in millions) on May 27, 2015. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) followed the footsteps of natural gas prices in yesterday’s trade. UNG fell by 0.29% and closed at $13.78 on Wednesday, May 27.

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On May 21, 2015, the EIA (U.S. Energy Information Administration) reported that natural gas in storage increased by 92 Bcf (billion cubic feet) for the week ending May 15. The EIA is will release the next natural gas stockpile report on Thursday, May 28, 2015. The Citigroup consensus shows that the inventory might rise by 87 Bcf for the week ending May 22, 2015.

Weather forecasting agencies estimate mild weather across several parts of the US over the next week. Normal weather will curb electric power plants’ demand for natural gas. The slowing demand might impact natural gas prices. As a result, prices could drop.

Gas futures fell for the sixth time in the last ten trading sessions. Over the same period, prices fell by 0.27% more on the average down days than on the average up days. July natural gas had an average performance among all of the other commodities in yesterday’s trade. Prices dropped by 1.86% YTD (year-to-date)—led by slowing demand.

Energy companies like Devon Energy (DVN), Rex Energy (REXX), and Antero Resources (AR) are impacted by declining natural gas prices. These stocks have a natural gas production mix that’s more than 46% of their production portfolio. They account for 2.9% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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