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Will Natural Gas Inventories Rise for a Thirtieth Straight Week?

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Natural gas inventory report 

The EIA (U.S. Energy Information Administration) is scheduled to publish the natural gas stockpile report today. Government data showed natural gas inventories rose by 81 Bcf (billion cubic feet) to 3,814 Bcf for the week ended October 16, 2015. Similarly, natural gas inventories rose by 100 Bcf to 3,733 Bcf for the week ended October 9, 2015. Natural gas stocks rose due to mild winter and due to rising production.

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Natural gas stockpile estimates and impact 

Market surveys from Reuters to Bloomberg suggest that natural gas inventories could rise between 68 Bcf and 70 Bcf for the week ending October 23, 2015. Last year during the same period, natural gas stocks rose by 87 Bcf. The five-year average gain during this time of year is 73 Bcf. Natural gas inventories rose for the twenty-ninth consecutive week as of the week ended October 16, 2015. Mild winter and rising natural gas production should push natural gas inventories higher.

Falling residential and commercial flows of natural gas compared to the previous week also add to natural gas inventories. The consensus of rising natural gas stocks should continue to drag natural gas prices lower.

Natural gas prices fell almost 20% in October 2015. The catastrophic fall in natural gas prices affects oil and gas producers like EXCO Energy (XCO), Rice Energy (RICE), Gulfport Energy (GPOR), and Memorial Resource Development (MRD). These companies’ natural gas output mix is more than 40% of their total production. These stocks account for 4.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

ETFs such as the PowerShares DB Energy ETF (DBE) and the iShares US Oil & Gas Exploration & Production ETF (IEO) are also affected by the volatility in the energy market.

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