3 Sep

Inventory Data Is Weighing on Natural Gas Prices

WRITTEN BY Gordon Kristopher

Natural gas prices fall

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.

October natural gas futures contracts fell by 2% and settled at $2.64 per MMBtu (British thermal units in millions) on September 2, 2015. Prices slumped due to the consensus of a larger-than-expected natural gas inventory increase. Gas-tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) moved in the same direction as natural gas prices in Wednesday’s trade. UNG fell by 1.97% and closed at $12.46 on September 2, 2015.

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The EIA (U.S. Energy Information Administration) will release its natural gas in storage report on September 3, 2015. The preliminary estimates suggest that natural gas inventories could rise by 90 Bcf (billion cubic feet) for the week ending August 28, 2015. Last week, government data showed that natural gas stocks increased by 69 Bcf (billion cubic feet) for the week ending August 21, 2015. The larger-than-anticipated increase in natural gas stocks is putting downward pressure on natural gas prices.

Commodity Weather Group reported that weather is expected to be mild across the mid-western parts of the United States during the third week of September 2015. In contrast, MDA Weather Services predicts warm weather across the eastern parts of the United States in September 2015. Warm weather could benefit natural gas prices.

This is the fifth up-day for natural gas prices in the last ten trading sessions. Natural gas prices fell by 0.35% more on down-days than on up-days. October natural gas futures were the worst performers in yesterday’s trade. Prices fell by 8.45% year-to-date due to oversupply concerns.

Oil and gas producers like Southwestern (SWN), Rice Energy (RICE), EXCO Resources (XCO), and Antero Resources (AR) are affected by falling natural gas prices. They account for 2.67% of the SPDR Oil and Gas ETF (XOP). These companies’ natural gas production mixes are more than 86% of their total production.

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