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Natural Gas Prices Decline ahead of the Stockpile Data

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Natural gas price drop

Natural gas futures for July delivery trading in NYMEX fell marginally by 0.69% on Wednesday. Prices settled at $2.86 per MMBtu (British thermal units in millions) on June 17, 2015. The consensus of mild weather and the increasing stockpile pushed natural gas prices lower. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also fell in the direction of natural gas prices in yesterday’s trade.

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The consensus of mild weather due to the tropical storm would curb the heating demand. As a result, demand for natural gas prices might drop. The tropical storm might bring heavy rain and strong winds. There’s a possibility of floods in Texas. AccuWeather reported normal temperatures across Houston in the next week of June 2015.

The EIA (U.S. Energy Information Administration) will release the weekly natural gas report on Thursday, June 18, 2015. Last week, the EIA estimated that gas in storage rose by 111 Bcf (billion cubic feet) for the week ending June 5. Mild weather led to an increase in the natural gas stockpile. Market estimates suggest that the stockpile could increase by 94 Bcf for the week ending June 12, 2015.

Gas prices dropped for the sixth time in the last ten trading sessions. Prices increased by 1.78% more on the up days than on the average down days, during the same period. July natural gas futures were among the worst performers in Wednesday’s trade. Prices declined 5% YTD (year-to-date)—led by the warmer weather forecast.

Upstream companies like Exco Resources (XCO), WPX Energy (WPX), and Devon Energy (DVN) are negatively impacted by declining crude oil prices. Combined, they account for 3.20% of the Spider Oil and Gas ETF (XOP). These companies have a natural gas production mix that’s greater than 43% of their total production.

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