Inventory Data: Putting Pressure on Natural Gas Prices
Crude Oil Rises and Natural Gas Falls: What Does This Signal?
Natural gas inventory report
The EIA (U.S. Energy Information Administration) releases the weekly gas stockpile report every Thursday. On Thursday, June 18, 2015, the EIA reported that natural gas in storage rose by 89 Bcf (billion cubic feet) to 2,433 Bcf for the week ending June 12, 2015. Last week, natural gas stocks rose by 111 Bcf to 2,344 Bcf for the week ending June 5, 2015. Industry surveys estimated a rise of 94 Bcf for the week ending June 12, 2015. Mild weather and slowing demand led to the rise in natural gas stocks.
Rising natural gas inventories imply that supply is rising or demand is falling. The natural gas inventories are 730 Bcf more than the levels of 1,703 Bcf in 2014. They’re also 46 Bcf more than the five-year average stock of 2,387 Bcf. The average five-year gain is at 89 Bcf. Likewise, gas stock rose by 112 Bcf during the same period last year. The next EIA report is expected to release on June 25, 2015. The consensus of a rising stockpile will continue to put pressure on natural gas prices due to mild weather forecasts and the tropical storm.
Falling natural gas prices impact upstream players like Memorial Resources (AR), Energy EXXI (EXXI), and Range Resources (RRC). They account for 4.08% of the Spider Oil and Gas ETF (XOP). These companies also have a natural gas production mix that’s more than 45% of their production portfolio.
Falling natural gas prices also impact ETFs like the Energy Select Sector SPDR ETF (XLE) and XOP. Like natural gas prices, they also fell in yesterday’s trade.
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