Natural gas prices fall
Natural gas futures contracts for August delivery fell by 1.77% and settled at $2.82 per MMBtu (British thermal units in millions) on July 20, 2015. Prices fell due to the mild weather forecast. The US benchmark following ETFs like the United States Natural Gas Fund LP ETF (UNG) mirrored the price trajectory of natural gas prices in yesterday’s trade. UNG fell by 1.95% and settled at $13.59 on Monday, July 20.
The latest forecasting model reports suggest that mild weather is expected in several parts of the US over the next week. Mild weather could curb the cooling demand for natural gas. The slowing demand could negatively impact natural gas prices.
On July 16, 2015, the EIA (U.S. Energy Information Administration) reported that the gas stockpile rose by 99 Bcf (billion cubic feet) for the week ending July, 10, 2015. The market consensus estimated that natural gas stocks might rise by 95 Bcf over the same period. The next report is scheduled to release on July 23, 2015.
Natural gas prices fell for the fifth time in the last ten trading sessions. Prices fell by 0.11% more on the down days than on up days, over the last ten days. August gas futures performed poorly against all of the other commodities in yesterday’s trade. Oil prices fell by 2% YTD (year-to-date), led by rising inventories and oversupply factors.
The roller coaster ride of natural gas prices affects oil and gas companies like Exco Resources (XCO), Synergy (SYRG), and Rosetta Resources (ROSE). These companies account for 2.35% of the SPDR Oil and Gas ETF (XOP). They also have a natural gas production mix that’s greater than 35% of their total production.