Natural gas inventory report
Last week, the EIA (U.S. Energy Information Administration) published the natural gas inventory report on Thursday, August 6, 2015. The government data showed that the natural gas stockpile rose by 32 Bcf (billion cubic feet) to 2,912 Bcf for the week ending July 31, 2015. Likewise, the natural gas stockpile rose by 52 Bcf to 2,880 Bcf for the week ending July 24, 2015.
Impact of the inventory rise
US natural gas inventories rose for the 16th consecutive week for the week ending July 31, 2015. Market surveys from the Wall Street Journal and Platt’s estimated that natural gas stocks could rise between 43 Bcf and 45 Bcf for the week ending July 31, 2015.
The consensus of the rising natural gas inventory implies that supply is rising or demand is falling. The rise in gas production is a result of rising production and slowing demand due to the mild weather forecast. This might be negative for natural gas prices.
Current natural gas inventories are 22.50% above the level of 2,377 Bcf last year. They’re also 2.20% more than the five-year average of 2,848 Bcf. The record stockpile will continue to add pressure to natural gas prices.
The roller coaster ride of natural gas prices affects oil and gas producers like EQT (EQT), Rice Energy (RICE), and Newfield Exploration (NFX). They account for 3.08% of the Spider Oil and Gas ETF (XOP). These companies’ natural gas production mix is greater than 46% of their total production. They also impact energy ETFs like XOP and the Energy Select Sector SPDR ETF (XLE).