US natural gas stocks
The EIA (U.S. Energy Information Administration) released its Natural Gas Weekly Update on Thursday, October 29, 2015. The data highlighted that US natural gas stocks rose by 63 Bcf (billion cubic feet) to 3,877 Bcf for the week ended October 23, 2015. Last week, natural gas inventory rose by 81 Bcf to 3,814 Bcf for the week ended October 16, 2015. The US natural gas inventory rose due to warmer-than-normal winter.
Natural gas stocks consensus
The latest surveys projected that natural gas inventories could rise between 68 Bcf and 70 Bcf for the week ending October 23, 2015. However, natural gas inventories are less than market expectations.
The rise in natural gas inventories for the thirtieth consecutive week as of the week ending October 23, 2015, weighed on the natural gas market. As a result, December natural gas futures contracts fell in yesterday’s trade.
Currently, natural gas inventories are 11.8% higher than their level of 3,468 Bcf in 2014. They are also 4.1% higher than the five-year average of 3,724 Bcf.
Record natural gas inventories are putting pressure on natural gas prices. Mild winter weather is also adding to the natural gas glut market. The long-term lower prices of natural gas prices impact the profitability of natural gas producers such as Southwestern Energy (SWN), EXCO Energy (XCO), Gulfport Energy (GPOR), and Memorial Resource Development (MRD).
These stocks’ natural gas production mixes are greater than 40% of their production portfolios. These companies account for 4.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).