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Will Natural Gas Inventories Rise for the 19th Consecutive Week?

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Aug. 14 2015, Published 12:49 p.m. ET

EIA stockpile report

On August 13, 2015, the EIA (U.S. Energy Information Administration) will release the weekly natural gas inventory report. The EIA reported that the natural gas stockpile rose by 32 Bcf (billion cubic feet) to 2,912 Bcf for the week ending July 31, 2015. The small rise in the inventory would have been due to the increased consumption from warm weather or power plant consumption. Warm weather is estimated across the US over the next month. This could benefit natural gas prices. It could draw down future inventories.

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Inventory estimate

The natural gas stockpile rose for the 18th straight week for the week ending July 31, 2015. The market estimates from Bloomberg to the Wall Street Journal suggest that the natural gas stockpile could rise by 55 Bcf for the week ending August 7, 2015.

The estimates of the rising natural gas stockpile imply that supply is rising or demand is falling. The current natural gas stockpile is 22% more than the levels last year. They’re also 2.20% more than the five-year average inventory of 2,848 Bcf. The five-year average during this period is 48 Bcf. All of these parameters may negatively affect natural gas prices.

Natural gas prices’ recent rise benefits upstream players like SouthWestern Energy (SWN), EQT (EQT), and Newfield Exploration (NFX). They account for 3.09% of the Spider Oil and Gas ETF (XOP). These companies’ natural gas production mix is more than 46% of their production portfolio.

ETFs like the Spider Oil and Gas ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) could benefit from rising natural gas prices.

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