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Natural Gas Prices Are Flat Ahead of the EIA’s Report

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Natural gas prices action

December natural gas futures were almost flat at $2.26 per MMBtu (British thermal units in millions) on November 12, 2015. Prices were unchanged despite the consensus of the rising natural gas inventory. Gas tracking ETFs like the United States Natural Gas ETF (UNG) rose slightly by 0.63% and settled at $9.62 on November 12, 2015.

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Inventory report

On November 13, 2015, the EIA (U.S. Energy Information Administration) will release the natural gas in storage report. The government data reported that natural gas stocks rose by 52 Bcf (billion cubic feet) for the week ending October 30, 2015. Market surveys estimate that that natural gas stocks could rise by 50 Bcf for the week ending November 6, 2015. The consensus of the rising production and weak demand due to mild weather support the rise in natural gas stocks. Read the next part of the series to learn more about the natural gas inventory update.

The National Weather Service reported that warmer winter weather will be experienced over the next ten days in the US. The eastern parts of the US could experience a warmer-than-normal winter. In contrast, the western parts of the US could experience colder-than-normal temperatures over the next eight to ten days. Mild weather would curb the heating needs and the demand for natural gas. As a result, excess supply and weak demand would negatively influence natural gas prices.

Volatility

This is the fifth down day for natural gas prices in the last ten days. Prices fell by 0.85% more on the average down days than on the average up days in the last ten sessions. Gas futures had mediocre performers in yesterday’s trade. Prices fell more than 21.7% YTD (year-to-date) due to the wide gap between the supply and demand.

The catastrophic fall in natural gas prices impacts US upstream players like Devon Energy (DVN), EXCO Resources (XCO), Rice Energy (RICE), and Anadarko Petroleum (APC). ETFs like the Guggenheim S&P Equal Weight Energy ETF (RYE) and the First Trust Energy AlphaDEX ETF (FXN) are also affected by the volatility in the oil and gas market.

In this series, we’ll look at natural gas prices and fundamentals. For an in-depth look at oil and gas as well as related companies, sectors, and drivers, please visit Market Realist’s Energy and Power page.

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