Natural gas inventory data
In the week ending May 11, natural gas inventories rose by 106 Bcf (billion cubic feet) to 1,538 Bcf—based on the EIA’s (U.S. Energy Information Administration) data announced on May 17. The rise was 2 Bcf more than the consensus estimate compiled by S&P Global Platts. On May 17, natural gas June futures rose 1.6%.
Inventories spread and natural gas prices
In the week ending May 11, the negative difference between natural gas inventories and their five-year average contracted by 2 percentage points compared to the previous week. The difference is called the “inventories spread.” For the week ending May 11, the inventories spread was at -24.6%.
In the week ending May 4, the inventories spread was at -26.6%. Natural gas prices are usually inversely related to the inventories spread. The above graph illustrates this relationship.
On May 17–22, natural gas June futures rose 1.7%. On May 17, the EIA released the natural gas inventory report for the week ending May 11. The increased cooling demand might be behind natural gas’s rise during this period.
Since May 17, Chesapeake Energy (CHK), Southwestern Energy (SWN), and Range Resources’ (RRC) returns were 5.8%, 0.2%, and -1.4%, respectively—the outperformers on our list of natural gas–weighted stocks.
Higher inventory levels
On May 24, the EIA is scheduled to release the natural gas inventory report for the week ending May 18. Any rise below 67 Bcf would push the inventories spread further into the negative territory—a bullish factor for natural gas prices.