EIA’s inventory report
On Friday, November 13, 2015, the EIA (U.S. Energy Information Administration) will publish the weekly US natural gas inventory report. The government data showed that natural gas stocks rose by 52 Bcf (billion cubic feet) to 3,929 Bcf for the week ending October 30, 2015. The natural gas stocks rose for the 31st consecutive week for the week ending October 30, 2015.
Natural gas inventory estimates
The data compiled by Bloomberg surveys project that the natural gas inventory could rise by 50 Bcf for the week ending November 6, 2015. The five-year average gain during this period of the year is 23 Bcf. The current natural gas stocks are 10% more than the level of 3,558 Bcf in 2014. They’re also 3.9% more than the five-year average level of 3,782 Bcf. The rising natural gas inventory implies that supplies are rising or demand is slowing. The supplies are rising due to improving technology and lower drilling costs. The demand is slowing due to the mild winter weather forecast. As a result, record inventory, a mild winter, and weak demand could drag natural gas prices lower.
The record lower natural gas prices impact natural gas producers’ profitability like Chesapeake Energy (CHK), Devon Energy (DVN), Newfield Exploration (NFX), and EXCO Resources (XCO). These companies’ natural gas production mixes are more than 40% of their total production. ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also affected by the ups and downs in the energy market.