Natural gas prices rise
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.
NYMEX-traded natural gas futures contracts for September delivery rose by 3.10% and closed at $2.93 per MMBtu (British thermal units in millions) on August 12, 2015. Prices rose due to the hot weather forecast despite the consensus of rising natural gas inventories. The US benchmark following ETFs like the United States Natural Gas Fund LP ETF (UNG) also rose in the direction of natural gas prices. UNG rose by 2.56% and settled at $14.01 at the end of trade yesterday.
The consensus of warm weather across the US could boost the demand for natural gas from the electric power plants. This resulted in the mammoth surge in natural gas prices. MDA Weather Services reported that warm weather could be experienced across Texas and the East Coast for the next 15 days.
The EIA (U.S. Energy Information Administration) is scheduled to release the weekly natural gas in storage report on August 13, 2015. The government data showed that natural gas stocks rose by 32 Bcf (billion cubic feet) for the week ending July 31, 2015. The consensus of rising natural gas stocks would continue to negatively affect natural gas prices.
Natural gas prices rose for the sixth time in the last ten days. Prices rose by 0.05% more on the up days than on the down days. Natural gas futures were among the top performers in yesterday’s trade. Prices rose by 1.18% YTD (year-to-date) due to the warm weather estimates.
The rise in natural gas prices positively impacts oil and gas producers’ margins like Exco (XCO), Antero (AR), and Cabot Oil & Gas (COG). These companies account for 2.73% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is greater than 86% of their production portfolio.