Natural Gas Market Is Volatile Due to Weather and Inventory Data
Natural gas stockpile
The EIA (U.S. Energy Information Administration) published its weekly natural gas in storage report on December 3, 2015. It showed that the natural gas stockpile fell by 53 Bcf (billion cubic feet) to 3,956 Bcf for the week ending November 27, 2015. In contrast, natural gas stocks rose by 9 Bcf to 4,009 Bcf for the week ending November 20, 2015. The natural gas inventory fell due to the marginal fall in the natural gas production for the week ending November 27—compared to the previous week.
Natural gas inventory forecast
The natural gas stockpile fell for the first time in the last 35 weeks for the week ending November 27, 2015. Industry surveys estimated that the natural gas stocks could fall by 47 Bcf for the same period. The better-than-expected fall in natural gas supported natural gas prices in yesterday’s trade. It implies that supplies are falling or demand is improving.
The underground natural gas storage in the lower 48 states of the US is divided into five storage regions—East, Midwest, Mountain, Pacific, and South Central. The natural gas inventory fell due to the fall in the inventory in the East, Midwest, and South Central regions. These regions’ inventories fell by 16 Bcf, 18 Bcf, and 10 Bcf, respectively, for the week ending November 27, 2015.
Currently, natural gas stocks are 16% more than the level of 3,413 Bcf in 2014. They’re also 6.7% greater than the five-year average of 3,709 Bcf. The record natural gas stockpile and forecast of mild winter will continue to weigh on natural gas prices.
Record low natural gas prices benefit natural gas producers like Chesapeake Energy (CHK), Antero Resources (AR), Newfield Exploration (NFX), and Range Resources (RRC). The uncertainty in the oil and gas market also impacts ETFs like the PowerShares DB Energy ETF (DBE) and the iShares US Oil Equipment & Services ETF (IEZ).
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