Will Natural Gas Continue to Rise?



Natural gas’s rise and energy stocks

On June 27, natural gas active futures rose 2.5% and settled at $2.324 per MMBtu (million British thermal units) due to bullish inventory data. Cabot Oil & Gas (COG) and Gulfport Energy (GPOR) rose 0.1% and 1.2%, respectively. They were the strongest natural gas–weighted stocks. They ignored the weakness in US crude oil prices. Cabot Oil & Gas focuses on natural gas production, while Gulfport Energy operates with a production mix of ~90% in natural gas.

Natural gas on June 28

As of 3:42 AM ET on June 28, natural gas active futures were almost flat. If the futures stay at those levels, natural gas prices will close 6.5% higher than the previous week. The level would be the highest weekly gain for natural gas active futures in 2019. In the week ending January 18, natural gas active futures rose 12.4%.

Inventory data

On June 27, the U.S. Energy Information Administration reported that natural gas inventories rose by 98 Bcf (billion cubic feet) for the week ending June 21—2 Bcf less than Reuters analysts’ expectation. The rise could support natural gas prices. For six consecutive weeks before June 21, natural gas inventories rose by more than 100 Bcf, which might have kept a lid on natural gas prices. On June 20, natural gas active futures closed at $2.19 per million British thermal units—the smallest closing for active futures since May 27, 2016.

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