US natural gas inventory
On December 17, 2015, the EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report. The report showed that the natural gas inventory fell by 34 Bcf (billion cubic feet) to 3,846 Bcf for the week ending December 11, 2015. Last week, natural gas stocks fell by 76 Bcf (billion cubic feet) to 3,880 Bcf for the week ending December 4, 2015. Industry surveys from the Wall Street Journal projected that natural gas stocks could fall by 41 Bcf for the week ending December 11, 2015. The less-than-expected fall led to the fall in US natural gas prices.
The US natural gas stocks fell for the third straight week for the week ending December 11, 2015. The US natural gas stocks fell due to the winter weather. However, the natural gas heating demand is less than the level last year. So, prices fell. They’re trading close to record lows. Lower natural gas prices benefit gas-based electric power plants and electricity consumers. The lower prices also impact natural gas producers like Newfield Exploration (NFX), Cimarex Energy (XEC), Cabot Oil & Gas (COG), and Devon Energy (DVN).
US natural gas storage regions
The EIA divides the US natural gas storage into two five regions. The five regions are East, Midwest, Mountain, Pacific, and South Central. The natural inventories fell the most in Midwest and East regions. They fell by 17 Bcf and 16 Bcf, respectively, for the week ending December 11, 2015.
Currently, natural gas stocks are 16.4% more than the level of 3,304 Bcf in 2014. They’re also 9.1% more than the five-year average of 3,524 Bcf. The South Central storage region’s inventories are 23% more than the levels last year. It’s the highest among all of the storage regions. The record natural gas stocks and mild winter weather will continue to put pressure on natural gas prices. Production continues to outpace demand for the week ending December 11, 2015. So, it puts more pressure on natural gas prices despite the fall in the natural gas inventory.
ETFs like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DB Energy ETF (DBE), and the PowerShares DWA Energy Momentum ETF (PXI) are impacted by the uncertainty in the energy market.