US natural gas stockpile data
The EIA (U.S. Energy Information Administration) released its weekly natural gas stockpile report on Thursday, October 8, 2015. The EIA reported that the natural gas stockpile rose by 95 Bcf (billion cubic feet) to 3,633 Bcf in the week ended October 2, 2015. Natural gas inventory rose by 98 Bcf to 3,538 Bcf in the week ended September 25.
Impact of stockpile data
US natural gas stocks rose for the 27th consecutive week in the week ended October 2, 2015. Natural gas inventory rose due to mild weather and increasing natural gas production. Market surveys estimated that natural gas stocks could increase by 99 Bcf for the week ended October 2. The less-than-expected inventory increase led to the increase in natural gas prices trading on Friday, October 9.
Currently, natural gas stocks are 13.9% more than the 3,190 Bcf last year. It’s also 4.5% more than the five-year average of 3,478 Bcf. The record natural gas inventory and speculation of rising inventory will weigh on natural gas prices in the short term. The consensus of rising production and slowing demand will also put pressure on natural gas prices.
The recent surge in natural gas prices will benefit US oil and gas producers such as WPX Energy (WPX), Gulfport Energy (GPOR), and Memorial Resource Development (MRD). These companies together account for 3.5% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
Natural gas production mixes for these stocks are greater than 68% of their total production. The increase in natural gas price benefits ETFs such as the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) and the PowerShares DB Energy ETF (DBE).