Natural gas prices fell
This series analyzes natural gas prices and fundamentals. For an in-depth fundamental look at oil and gas and related companies, sectors, and drivers, please refer to our Energy and Power page.
September natural gas futures contracts fell by 4.91% and settled at $2.78 per MMBtu (British thermal units in millions) on August 13, 2015. Prices fell due to a better-than-expected rise in natural gas inventory data. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also followed the price trajectory of natural gas prices in yesterday’s trade. UNG fell by 4.14% and closed at $13.43 at the end of trade yesterday.
On August 13, 2015, the EIA (U.S. Energy Information Administration) published the weekly natural gas stockpile data. The EIA report showed that natural gas in storage rose by 65 Bcf (billion cubic feet) for the week ending August 7, 2015. Market surveys projected that natural inventories could rise by 55 Bcf over the same period. The better-than-expected inventory rise led to a massive fall in natural gas prices yesterday.
The latest forecasting models suggest that the eastern, central, and southern parts of the US might experience warm weather during the fourth week of August 2015. This could boost power plants’ demand for natural gas. In turn, it would support natural gas prices.
This is the fourth up day for natural gas prices in the last ten days. Natural gas prices fell by 0.34% more on the down days than on the up days, in the last ten trading sessions. September natural gas futures were the worst performers in Thursday’s trade. Prices fell by 2.60% YTD (year-to-date) due to oversupply concerns.
The long-term lower natural gas prices affect upstream players like Southwestern Energy (SWN), Exco (XCO), and Cabot Oil & Gas (COG). They account for 2.65% of the SPDR Oil and Gas ETF (XOP). These companies’ natural gas production mix is more than 86% of their total portfolio.