uploads/2015/07/ung-ETF1.png

Natural Gas Prices Hit a New Monthly Low before the EIA’s Report

By

Updated

Natural gas prices fall for the third day

Natural gas futures contracts for August delivery fell by 1.1% on Wednesday. Prices fell for the third day and settled at $2.69 per MMBtu (British thermal units in millions) on July 8, 2015. The rising supply consensus led to the fall in natural gas prices. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also fell in yesterday’s trade. UNG fell by 1.30% and settled at $12.90 on July 8, 2015.

On July 9, 2015, the EIA (U.S. Energy Information Administration) will release the weekly natural gas in storage report. The consensus of rising stocks continues to put pressure on natural gas prices. Last week, gas in storage rose by 69 Bcf (billion cubic feet) for the week ending June 26, 2015.

Article continues below advertisement

Weather forecasting agencies expect normal weather over the next two weeks in the US. Normal weather will curb the cooling demand. This will lead to a fall in the demand for natural gas. In contrast, MDA Weather Services reported that warmer weather is expected in the Midwest and southern parts of the US between July 13 and July 22, 2015.

Gas prices fell for the sixth time in the last ten trading sessions. During the same period, prices fell by 1.08% more on the down days than on the average up days. August natural gas futures had an below average performance compared to other commodities in yesterday’s trade. Gas prices followed the long-term downward trend and fell more than 6% YTD (year-to-date)—led by oversupply factors.

The roller coaster ride of natural gas prices affects upstream players like Comstock Resources (CRK), Concho Resources (CXO), and EP Energy (EPE). Combined, they account for 3.16% of the Spider Oil and Gas ETF (XOP). These stocks also have a gas production mix that’s greater than 35% of their total production.

Advertisement

More From Market Realist