Slowing Consumption Could Impact Natural Gas Prices
Supply and Demand Imbalance Impacts Natural Gas Prices
Gas consumption
Gas deliveries to residential and commercial segments saw a weekly and daily fall for the week ending July 31, 2015. The EIA (U.S. Energy Information Administration) estimates that natural gas flows to residential and commercial segments might fall in 2015—compared to 2014. Likewise, gas deliveries to industrial plants also saw a daily and weekly fall for the week ending July 31, 2015.
The consensus of slowing consumption, despite warm weather estimates, could continue to negatively impact natural gas prices. However, natural gas deliveries to electric power plants rose on a daily basis. The demand for natural gas would be triggered from electric power plants, according to EIA estimates in 2015.
Inventory estimates
On Thursday, July 30, 2015, the EIA published that natural gas inventories rose by 52 Bcf (billion cubic feet) to 2,880 Bcf for the week ending July 24, 2015. The commercial natural gas stockpile rose for the 17 th week in a row. Current natural gas stocks are 25% more than the level of 2,294 Bcf last year. They’re also 3% more than the five-year average of 2,795 Bcf.
Oil and gas producers like Range Resources (RRC), ExxonMobil (XOM), and Newfield Exploration (NFX) benefit from rising natural gas prices. They account for 3.22% of the Spider Oil and Gas ETF (XOP). These companies’ natural gas production mix is more than 46% of their total production. They also benefit ETFs like XOP and the Energy Select Sector SPDR ETF (XLE).
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