Inventory data

In the week ended January 5, 2018, there was a record decline of 359 Bcf (billion cubic feet) in natural gas inventories. The natural gas inventories level for that week was 2,767 Bcf based on the EIA (U.S. Energy Information Administration) data on January 11, 2018. The significant fall fueled a 6.1% upside in natural gas futures that same day.

Could Natural Gas Rise after Inventory Data?

Inventories spread

In the week ended January 5, 2018, natural gas inventories were 12.1% below their five-year average. That gap, or the inventories spread, was -5.8% in the previous week. Often, natural gas prices move opposite to the inventories spread. For example, in the last four weeks, the inventories spread fell continuously, and natural gas prices rose 19.8%.

Required fall

A fall of more than 177 Bcf in the week ended January 12, 2018, could ensure that the inventories spread will fall further. The market also expects a fall of 201 Bcf in natural gas inventories for the same week. The EIA will release its natural gas inventory data on January 18, 2018.

However, natural gas–heavy stocks such as WPX Energy (WPX) and Antero Resources (AR) may react independently of natural gas’s possible upside. So broad indexes such as the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) could fail to catch natural gas’s moves.

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