EIA’s natural gas stock estimates
Every week on Thursday, the EIA (U.S. Energy Information Administration) publishes the natural gas in storage report. The data will release today at 10:30 AM EST. Last week, natural gas stocks rose by 75 Bcf (billion cubic feet) to 2,508 Bcf for the week ending June 19, 2015. For the week ending June 26, 2015, Bloomberg surveys estimate a rise by 74 Bcf. During the same period last year, natural gas stocks gained by 102 Bcf. Mild weather might have slowed down the demand for natural gas during this period.
Currently, natural gas stocks are 37% more than the level of 1,829 Bcf in 2014. However, they’re 6.7% below the five-year average gas stocks of 2,651 Bcf. The five-year average weekly gain is at 75 Bcf over the same period. The better-than-expected rise in natural gas stocks will put pressure on natural gas prices. This means that supplies are rising or demand is falling. The consensus of mild weather for the week ending July 3 will also negatively impact natural gas prices.
The EIA also expects natural gas production to rise in 1Q15. It expects that natural gas production might hit the December 2014 peak of 74.69 Bcf. It estimated that April 2015 production might have hit 74.63 Bcf.
Upstream players like Devon Energy (DVN), SM Energy (SM), and Parsley Energy (PE) are impacted by falling natural gas prices. Combined, they account for 4.19% of the Spider Oil and Gas ETF (XOP). These companies also have a gas production mix that’s greater than 46% of their total production. Lower gas prices also impact ETFs like the Energy Select Sector SPDR ETF (XLE) and XOP.