EIA stockpile report
Last week, the EIA (U.S. Energy Information Administration) published that the gas stockpile rose by 75 Bcf (billion cubic feet) to 2,508 Bcf for the week ending June 19, 2015. The EIA will release the natural gas storage report tomorrow for the week ending June 26, 2015. Over the same period, natural gas prices are expected to rise by 74 Bcf, according to Bloomberg surveys.
The five-year average weekly gain is at 75 Bcf over the same period. During this period, warmer weather led to the fall in stockpiles. Current gas stocks are 37% more than the level of 1,829 Bcf last year. However, they’re 6.7% lower than the five-year average stockpile of 2,651 Bcf. The consensus of the rising stockpile will continue to put pressure on natural gas prices.
The EIA projects that natural gas consumption from electric power plants will account for 33% in the US. The continued demand from electric power plants will support natural gas prices. The consensus of slowing natural gas production and production growth will also narrow down the gap between supply and demand. This might boost natural gas prices. Weather will play a pivotal role in influencing natural gas prices in the short term.
Yesterday’s rise in natural gas prices will benefit oil and gas producers like WPX Energy (WPX), Antero Resources (AR), and Exco Resources (XCO). These stocks have a gas production mix that’s greater than 43% of their total production. They account for 2.98% of the Spider Oil and Gas ETF (XOP). The volatility in oil and gas ETFs also impacts the Energy Select Sector SPDR ETF (XLE) and XOP.