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Will Natural Gas Stocks’ Data Put Pressure on Natural Gas Prices?

Gordon Kristopher

Natural Gas Market Update: Gas Prices Remain Volatile

(Continued from Prior Part)

Natural gas stocks  

The EIA (U.S. Energy Information Administration) is scheduled to release its natural gas stockpile report on November 5, 2015. It stated that natural gas stocks rose by 63 Bcf (billion cubic feet) to 3,877 Bcf for the week ending October 23, 2015. Similarly, natural gas stocks rose by 81 Bcf to 3,814 Bcf for the week ending October 16, 2015. Mild winter weather led to the rise in natural gas stocks.

Natural gas stock estimates 

The data compiled by Bloomberg suggest that natural gas stocks rose by 57 Bcf for the week ending October 30, 2015. During the same period last year, natural gas stocks rose by 87 Bcf. The five-year seasonal rise during this period is at 58 Bcf. Mild weather estimates might have supported the rise in natural gas stocks during this period. US natural gas stocks rose for the 30th straight week for the week ending October 23, 2015. The rising natural gas stocks will continue to put pressure on natural gas prices in the oversupplied market. We’ll discuss natural gas production in the next part of this series.

The current natural gas stocks are 11.8% more than the level of 3,468 Bcf in 2014. They’re also 4.1% greater than the five-year seasonal average of 3,724 Bcf. The record inventory and slowing demand will add pressure to natural gas prices and producers. Natural gas producers like Newfield Exploration (NFX), Range Resources (RRC), Rice Energy (RICE), and Memorial Resource Development (MRD) are impacted by the falling natural gas prices. These stocks’ natural gas production mixes are more than 40% of their production portfolio. ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI) are also affected by the uncertainty in the oil and gas market.

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