Is Demand Data Fully Priced into Natural Gas Prices?

Natural gas’s rise and energy stocks

Last week, natural gas July futures rose 2.1% and settled at $2.387 per MMBtu (million British thermal units). Bullish inventory data and higher demand could be behind the recovery in natural gas prices.

Is Demand Data Fully Priced into Natural Gas Prices?

Last week, Chesapeake Energy (CHK) and Cabot Oil & Gas (COG) fell 6.3% and 6.6%, respectively, and outperformed natural gas–weighted stocks. A fall of 2.7% in US crude oil prices might have been behind the downside in these natural gas–weighted stocks last week.

Natural gas on June 17

At 7:21 AM ET on June 17, natural gas active futures were down 0.4%. According to Refinitiv data on June 14, the demand in the lower 48 US states for this week could rise by 2.3 Bcf (billion cubic feet) per day from the demand of 80.1 Bcf last week due to higher temperatures. This week, natural gas supplies in the US are expected to rise moderately to 96.6 Bcf per day from 96.3 Bcf per day last week. The oil rig count at more than a one-year low might have limited the upside in natural gas supplies. The oil rig count is important for natural gas supplies.

However, the expectation for higher demand this week might have been fully priced into natural gas prices. On June 14, natural gas prices rose 2.7%. If the demand growth estimate declines for next week, natural gas prices might retreat from the current level this week.