Natural Gas Market: Lower Prices and a 16-Year Low Rig Count
US natural gas rig count
Baker Hughes (BHI) published the US natural gas rig count on December 11, 2015. The data highlighted that the natural gas rig count fell by seven to 185 for the week ending December 11, 2015. In contrast, the natural gas rig count rose by three to 192 for the week ending December 4, 2015. The US natural gas rig count fell by ten in the last ten weeks. The total oil and gas rig count fell by 28 to 709 rigs. It’s the lowest level since September 1999. The US oil and gas rigs fell due to the mammoth fall in oil and gas prices. The fall in the rigs impacts drillers like Superior Energy Services (SPN), Baker Hughes, Schlumberger (SLB), and Halliburton (HAL). These stocks account for 35% of the iShares US Oil Equipment & Services ETF (IEZ).
Natural gas inventory
The EIA (U.S. Energy Information Administration) reported that the natural gas inventory fell by 76 Bcf (billion cubic feet) to 3,880 Bcf for the week ending December 4, 2015. Currently, the natural gas inventory is 15% more than the level of 3,366 Bcf last year. It’s also 6.5% more than the five-year average of 3,644 Bcf. The EIA forecasts that the natural gas stocks will fall to 1,862 Bcf by the end of March 2016. It’s 240 Bcf more than the five-year seasonal average. The record natural gas inventory and mild winter weather will weigh on natural gas prices in the short term.
The uncertainty in the oil and gas market impacts ETFs like the PowerShares DB Energy ETF (DBE) and the PowerShares DWA Energy Momentum ETF (PXI).
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