US natural gas prices
US natural gas prices rose ~1.9% between Friday, October 30, 2015, and Thursday, November 5, 2015. Prices closed at ~$2.36 per MMBtu (British thermal units in millions) on November 5 and ~$2.32 per MMBtu on October 30.
Higher natural gas prices are positive for natural gas producers such as Chesapeake Energy (CHK), Range Resources (RRC), QEP Resources (QEP), and Cabot Oil & Gas (COG), because these companies make more money when natural gas prices rise. These companies combined make up ~2% of the Vanguard Energy ETF (VDE).
With higher prices, natural gas producers may be inclined to produce more. This inclination would be positive for the energy transportation MLP sector, which includes companies such as MarkWest Energy Partners (MWE). Higher production would mean higher volumes to transport, leading to higher MLP revenues.
Natural gas weekly price recap
Natural gas prices on Monday, November 2, 2015, fell ~2.8% from Friday, October 30. The fall in prices was a result of milder weather forecasts. Prices settled at ~$2.26 per MMBtu on Monday.
On Tuesday, prices fell slightly by ~0.1%. Prices settled at $2.25 per MMBtu, weighed down by weaker demand concerns as weather forecasts remained mild.
On Wednesday, prices recovered slightly. Weather forecasts turned cooler, leading to the increase. However, milder forecasts later in the day limited gains. Prices rose by ~0.4%, to settle at $2.26 per MMBtu.
On Thursday, prices rose due to the EIA’s (U.S. Energy Information Administration) bullish inventory report, which showed that storage inventory numbers had increased less than market expectations. Prices rose by ~4.5% and settled at ~$2.36 per MMBtu.
Early Friday, October 30, prices held strong and continued trading at~$2.36 per MMBtu. In the next part of this series, we’ll look at how various securities exposed to natural gas performed last week.