Natural gas rigs
The natural gas (UNG)(DGAZ)(BOIL)(FCG)(GASL) rig count fell by one to 87 for the week ending on April 29, 2016. On a year-over-year basis, natural gas rigs fell by 135. The gross natural gas production only fell by 2.6% for the week ending on April 27—compared to the same period last year. It clearly implies that the fall in rig counts doesn’t necessarily mean that production will also fall by the same proportion. Today, rigs are operated with higher operational efficiency. Natural gas is also produced along with crude oil. So, surging crude oil production brought more natural gas with it.
Natural gas production
Data from Bentek Energy pointed out that the average daily natural gas production from April 1 to April 23 was 1% lower than the production in March 2016. So far, it’s 2.5% lower compared to February 2016. The above development could be substantial for natural gas–weighted stocks such as Comstock Resources (CRK), Ultra Petroleum (UPL), Southwestern Energy Company (SWN), and others.
Natural gas futures
Strong production combined with weak demand this winter resulted in natural gas inventories that were 48.2% above their five-year average for the week ending on April 22, 2016. The warmer winter was due to the El Niño phenomenon. On May 2, natural gas futures closed at $2.04. Natural gas futures were trading 2.4% above their 100-day moving average and 0.3% above their 20-day moving average. The above graph shows natural gas futures relative to key moving averages.