EIA’s inventory report
On July 9, 2015, the EIA (U.S. Energy Information Administration) will release the weekly natural gas inventory report. Last week, the EIA report showed that gas stocks rose by 69 Bcf (billion cubic feet) to 2,577 Bcf for the week ending June 26, 2015. Market surveys suggest that gas stocks might rise by 85 Bcf for the week ending July 3, 2015.
Natural gas stocks rose for 13 straight weeks. Rising natural gas inventories imply that demand is slowing or supply is rising. The better-than-expected inventory rise will put downward pressure on natural gas prices. In contrast, the lower-than-expected inventory rise might have a positive impact on natural gas prices.
Current natural gas inventories are 34.6% more than the total inventories of 1,915 Bcf in 2014. They’re also 1.1% more than the five-year average stocks of 2,548 Bcf. These record natural gas stocks will continue to pressure natural gas prices.
Upstream players like Stone Energy (SGY), ExxonMobil (XOM), and Parsley Energy (PE) are negatively impacted by lower natural gas prices. Combined, they account for 3.89% 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.
Volatility in natural gas prices also impacts ETFs like the XOP and the Energy Select Sector SPDR ETF (XLE). These ETFs moved in the opposite direction of natural gas prices yesterday. They rose by 2.74% and 0.91%, respectively.