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EIA’s Natural Gas Report Benefits Natural Gas Prices

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Aug. 24 2015, Published 8:16 a.m. ET

EIA inventory report

On August 20, 2015, the EIA (U.S. Energy Information Administration) published the weekly natural gas inventory report. For the week ending August 14, 2015, the EIA reported that the natural gas in storage rose by 53 Bcf (billion cubic feet) to 3,030 Bcf. Last week, natural gas stocks rose by 65 Bcf to 2,977 Bcf for the week ending August 7, 2015.

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Impact

For the week ending August 14, 2015, the US natural gas stockpile rose for the 20th consecutive week. Market surveys projected that the natural gas stockpile could rise by 60 Bcf over the same period. The five-year average rise during this period was 54 Bcf. Likewise, the natural gas stockpile rose by 84 Bcf during the same period last year.

However, the less-than-anticipated rise in natural gas inventories supported natural gas prices. This implies that supplies fell more than market estimates or demand rose over the period. Warm weather might have led to the demand in natural gas prices.

Current natural gas stocks are 19.20% more than the levels of 2,542 Bcf in 2014. They’re also 2.70% more than the five-year average inventory of 2,950 Bcf.

US crude oil and natural gas producers like EXCO Resources (XCO), Rice Energy (RICE), and Newfield Exploration (NFX) are positively impacted by rising natural gas prices. These stocks’ natural gas production mix is greater than 46% of their production portfolio. They account for 3.13% of the SPDR Oil and Gas ETF (XOP).

Oil and gas ETFs like the XOP and the Energy Select Sector SPDR ETF (XLE) are also impacted positively by rising natural gas prices. These ETFs fell in the opposite direction of natural gas prices in yesterday’s trade.

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