US natural gas stocks
On November 16, 2015, the EIA (U.S. Energy Information Administration) published its natural gas in storage report. It reported that natural gas stocks rose by 54 Bcf (billion cubic feet) to 3,985 Bcf for the week ending November 6, 2015. Likewise, the natural gas inventory rose by 52 Bcf (billion cubic feet) to 3,929 Bcf for the week ending October 30, 2015.
Natural gas stock estimates and impact
Natural gas stocks rose for the 32nd straight week for the week ending November 6, 2015. Market surveys projected that the natural gas stocks could rise by 50 Bcf for the week ending November 6, 2015. The initial inventory reports estimated that natural gas stocks rose by 49 Bcf for the same period. As a result, a lower-than-expected increase led to the rise in natural gas prices. The new inventory reports, based on the new classification of storage zones, projected that natural gas stocks rose by 54 Bcf. On Friday, November 13, the natural gas price momentum increased due to the cold weather forecast in the Midwest parts of the US. As a result, new estimates didn’t have much of an impact on the natural gas prices.
The EIA divided the old natural gas storage zones into three zones—Eastern, Western, and the Producing region. However, the EIA changed the three zones to five zones in the November 16, 2015, report. According to the report, the natural gas storing zones are divided to Eastern, Midwest, Mountain, Pacific, and South Central. The US active natural gas inventories are marching toward a record 4 trillion cubic feet. This puts pressure on natural gas prices.
The record low natural gas prices impact oil and gas producers’ margins like EXCO Resources (XCO), Range Resources (RRC), Newfield Exploration (NFX), and Devon Energy (DVN). ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also affected by the uncertainty in the energy market.