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Natural Gas Priced ahead of the EIA’s Inventory Report

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EIA’s gas stocks report

The EIA (U.S. Energy Information Administration) released its weekly natural gas report on July 9, 2015. The report showed that natural gas stocks rose by 91 Bcf (billion cubic feet) to 2,668 Bcf for the week ending July 3, 2015. Likewise, gas stocks rose by 69 Bcf to 2,577 Bcf for the week ending June 26, 2015. Market surveys estimated a rise in natural gas stocks between 85 Bcf and 93 Bcf for the week ending July 3, 2015.

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Natural gas prices fell for three consecutive days ahead of the storage data. As a result, the inline expectation of a rise in natural gas storage had a marginal impact on natural gas prices. Instead, traders who were worried about the uncertain weather squared off their short positions. This resulted in a rise in natural gas prices yesterday.

Gas stocks rise for 14 consecutive weeks

Natural gas inventories have risen for 14 straight weeks. Mild weather played a pivotal role in the rising natural gas supplies. It was estimated that even production rose during this period. Currently, natural gas stocks are 32% more than the level of 2,009 Bcf last year. They’re also 1.7% more than the five-year average of 2,623 Bcf.

Natural gas production is divided into three regions—eastern, western, and producing region. Natural gas stocks were 98 Bcf and 24 Bcf above the five-year average in the producing region and western region as of July 3, 2015. In contrast, eastern region stocks were 77 Bcf below the five-year average.

The volatility in natural gas prices impacts upstream players like Noble (NBL), Sandridge (SD), and Parsley Energy (PE). Combined, they account for 3.65% of the Spider Oil and Gas ETF (XOP). These companies also have a natural gas production mix that’s greater than 46% of their total production.

They also impact energy ETFs like the Energy Select Sector SPDR ETF (XLE) and XOP.

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