Natural gas inventory report
The EIA (U.S. Energy Information Administration) released its weekly natural gas stockpile report on August 13, 2015. The government data showed that natural gas in storage rose by 65 Bcf (billion cubic feet) to 2,977 Bcf for the week ending August 7, 2015. Last week, the gas stocks also rose by 32 Bcf to 2,912 Bcf for the week ending July 31, 2015. The surge in inventory was due to the mild weather or the rise in natural gas production.
Better-than-expected inventory rise
The market surveys projected that the natural gas inventories rose by 55 Bcf for the week ending August 7, 2015. However, the better-than-expected rise in the natural gas inventory led to carnage in the natural gas market. The natural gas in storage rose for the 19th consecutive week for the week ending August 7, 2015.
The rising natural gas inventories imply that supply is rising or demand is falling. Currently, natural gas stocks are 21.20% more than the levels of 2,456 Bcf in 2014. They’re also almost 3% more than the five-year average inventory of 2,896 Bcf.
The collateral damage of natural gas prices negatively impacts oil and gas producers like Rice Energy (RICE), EQT (EQT) and Newfield Exploration (NFX). Combined, they account for 3.38% of the Spider Oil and Gas ETF (XOP). These companies’ natural gas production mix is more than 46% of their production portfolio.