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Natural Gas Prices Fall ahead of the EIA’s Report

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Natural gas prices fall

Natural gas futures contracts for August delivery fell for the first time after rising for the three consecutive days. Prices fell by 0.84% and settled at $2.84 per MMBtu (British thermal units in millions) on Tuesday, July 14, 2015. Natural gas prices fell due to the consensus of rising natural gas stocks. ETFs like the United States Natural Gas Fund LP ETF (UNG) mirrored the performance of natural gas prices in yesterday’s trade. UNG fell by 0.73% and settled at $13.61 on July 14, 2015.

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The EIA (U.S. Energy Information Administration) will release the natural gas stockpile report on July 16, 2015. Last week, the EIA reported that gas stocks rose by 91 Bcf (billion cubic feet) for the week ending July 3, 2015. Market surveys suggest that US gas stocks might rise by 88 Bcf for the week ending July 10, 2015. The estimates of rising gas stocks will continue to put pressure on natural gas prices.

MDA Weather Services reported that mild weather is expected across the Northeast and Great Lakes regions of the US over the next five days. In contrast, warmer weather is estimated in the southern parts of the US. The three-day rally was driven by massive short covering from traders—driven by warmer weather estimates.

Natural gas prices fell for the fifth time in the last ten trading sessions. Over the same period, gas prices rose by 1.15% more on the up days than on down days. August natural gas futures had a mediocre performance with respect to all other commodities in yesterday’s trade. Prices rose a meager 0.17% YTD (year-to-date)—led by the warm weather estimates.

Oil and gas producers like Bill Barrett (BBG), REX Energy (REXX), and Rossetta Resources (ROSE) are impacted by falling natural gas prices. They account for 2.96% of the SPDR Oil and Gas ETF (XOP). These companies also have a gas production mix that’s greater than 35% of their total production.

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