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Will the Natural Gas Inventory Rise for the 31st Straight Week?

Gordon Kristopher

Weather and Inventory Are against Bullish Natural Gas Traders

(Continued from Prior Part)

Natural gas inventory 

On November 5, 2015, the EIA (U.S. Energy Information Administration) will publish its weekly US commercial natural gas inventory report. Last week, the government agency reported that the natural gas inventory rose by 63 Bcf (billion cubic feet) to 3,877 Bcf for the week ending October 23, 2015. Likewise, the natural gas inventory rose by 81 Bcf to 3,814 Bcf for the week ending October 16, 2015. The natural gas inventory rose due to rising supplies and mild weather.

Inventory estimates 

Natural gas inventories rose for the 30th consecutive week for the week ending October 23, 2015. Natural gas inventories rose by 87 Bcf during the same period last year. The five-year seasonal average gain is 81 Bcf. Market surveys project that natural gas inventories could rise by 75 Bcf for the week ending October 30, 2015. During the same week last year, natural gas inventories rose by 91 Bcf. The five-year seasonal gain during this week is 68 Bcf.

Currently, natural gas inventories are 11.8% higher than the level of 3,468 Bcf recorded in 2014. They are also 4.1% higher than the five-year seasonal average of 3,724 Bcf. Record inventory should put downward pressure on natural gas prices.

US upstream players include Rice Energy (RICE), Range Resources Corporation (RRC), Southwestern Energy Company (SWN), and Memorial Resource Development Corp. (MRD). These companies’ natural gas output mixes are greater than 40% of their production portfolio. ETFs such as the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also affected by the ups and downs in the energy market.

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