Natural Gas Rises from Its One-Month Low on Inventory Data



Inventories supported natural gas on March 28

On March 28, at 12:11 PM EDT, natural gas May futures rose 0.4% from their one-month low. On the same day, the EIA (U.S. Energy Information Administration) reported a fall of 36 Bcf (billion cubic feet) in natural gas inventories, just 4 Bcf below the Reuters consensus estimate of a fall of 40 Bcf.

The fall in inventories might have supported natural gas prices. The negative difference between natural gas inventories and their five-year average (or the inventories spread) expanded by 50 basis points on a week-over-week basis in the week that ended on March 22—a positive development for natural gas prices. At -33.2% on the day, the inventories spread was at its lowest level since June 6, 2014.

Impact on energy stocks and the market

The recovery in natural gas prices could be important for natural gas–weighted stocks such as Range Resources (RRC), Cabot Oil & Gas (COG), Antero Resources (AR), and Chesapeake Energy (CHK). Broader market indexes such as the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) are also affected by fluctuations in energy commodities.

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