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Natural Gas Prices: Flat for the Second Day, Test a 5-Month Low

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Natural gas price action

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 rose slightly by 0.86% and settled at $2.59 per MMBtu (British thermal units in millions) on Thursday, September 24, 2015. Prices rose despite a larger-than-expected rise in the natural gas inventory. ETFs like the United States Natural Gas Fund LP ETF (UNG) followed the price path of natural gas prices in yesterday’s trade. UNG rose by 1.24% and settled at $12.84 at the close of trade on September 24, 2015.

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The EIA (U.S. Energy Information Administration) published the weekly natural gas report on September 24, 2015. It reported that the natural gas stockpile rose by 106 Bcf (billion cubic feet) for the week ending September 18, 2015. Market surveys estimated that the natural gas stockpile might rise by 99 Bcf for the same period. Unexpectedly, natural gas prices settled higher at the close of trade yesterday despite the large inventory increase.

The latest forecasting model suggests that warm weather could be seen over the last week of September 2015 in the south and southwestern parts of the US. In contrast, north-central states should experience mild weather. Warm weather could support natural gas demand and natural gas prices.

However, hedge funds have increased their bearish bets due to the additional fall in the natural gas prices. The latest data from CFTC (U.S. Commodity Futures Trading Commission) highlight that the net bearish positions are at 118,367 contracts.

Natural gas prices fell by 10.21% YTD (year-to-date). They’re down 3.53% for September 2015. The long-term oversupply concerns are dragging natural gas prices lower. The lower natural gas prices impact gas producers’ margins like EQT (EQT), Antero Resources (AR), and EXCO Resources (XCO). These stocks account for 2.69% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas production mix is more than 86% of their total production.

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