Natural Gas Market: Weather Overshadows Bearish Traders
US natural gas rig count
On November 13, 2015, Baker Hughes (BHI) published its weekly natural gas rig count report. BHI reported that the natural gas rig count fell by six to 193 for the week ending November 13, 2015. In contrast, the natural gas rig count rose by two to 199 for the week ending November 6, 2015. The active US natural gas rig count fell for the first time in the last five weeks.
Currently, the US natural gas rig count is 45% less than the rig count of 350 during the same period in 2014. The US natural gas rig count fell due to the long-term oversupply concerns. Prices fell by 30% in the last year. This led to a fall in the drilling activity. As a result, drillers like Baker Hughes, Schlumberger (SLB), Superior (SPN), and Halliburton (HAL) are feeling the heat.
The EIA (U.S. Energy Information Administration) published its monthly drilling report on November 10, 2015. The report projected that the US natural gas output could fall by 394 million cubic feet per day in December 2015 compared to November 2015. However, the long-term forecast suggests that production could outpace demand. It means that prices will fall more. It also suggests that crude oil rigs could fall more due to lower gas prices. Oil and gas drillers are producing more to offset lower gas prices and improve their revenue. Meanwhile, oil drillers improved their efficiency due to an advancement in technology. This is due to long-term lower oil and gas prices.
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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