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Rising Natural Gas Inventories Could Pressure Natural Gas Prices

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EIA report 

The EIA (U.S. Energy Information Administration) will release the weekly natural gas in storage report on Thursday, August 6, 2015, for the week ending July 31, 2015. Last week, the government data showed that the natural gas stockpile rose by 52 Bcf (billion cubic feet) to 2,880 Bcf for the week ending July 24, 2015. The inventories rose by 61 Bcf for the week ending July 17, 2015.

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Inventory estimates and impact

For the week ending July 24, 2015, the natural gas inventory rose for the 17th consecutive week. The market surveys project that natural gas inventories might rise by 50 Bcf for the week ending July 31, 2015. The consensus of the rising natural gas inventory might negatively impact natural gas prices. The rising inventory implies that supply is rising and demand is slowing despite the warm weather forecast.

The current natural gas inventories are 25% more than the level of 2,294 Bcf in 2014. They’re also 3% more than the five-year average of 2,795 Bcf. Inventories rose by 83 Bcf during the same period last year. The average five-year seasonal gain was at 53 Bcf.

Rising natural gas prices benefit oil and gas producers like Chesapeake Energy (CHK), ExxonMobil (XOM), and Newfield Exploration (NFX). They account for 3.21% 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 ETFs like XOP and the Energy Select Sector SPDR ETF (XLE).

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