Increasing Inventory Data Puts Pressure on Natural Gas Prices
Natural Gas Production Increases Despite the Lower Gas Rig Count (Part 1 of 3)
Natural gas price movement
Below is our natural gas price fundamental analysis. For an in-depth look at natural gas and related companies, sectors, and drivers, please refer to our Energy and Power page.
Natural gas futures for May delivery settled unchanged at $2.53 per MMBtu (British thermal units in millions) on April 24, 2015. The massive inventory data continued to put pressure on natural gas futures for May. The United States Natural Gas Fund LP ETF (UNG) diverged from the natural gas price movement. It fell marginally by 0.39% and settled at $12.71 on Friday.
Last week, the EIA (U.S. Energy Information Administration) released the natural gas weekly report on April 23, 2015. The weekly gas in storage rose by 90 Bcf (billion cubic feet) against the industry consensus of 87 Bcf. Prices declined 2.37% for the week ending April 24, 2015. This implies weak demand or oversupply of natural gas. The consensus of increasing inventory will continue to put pressure on the gas prices for the week ahead.
Yesterday, gas prices were almost flat. However, they fell for the fifth time in the last ten trading sessions. During this period, prices increased by 0.21% more on the average up days than on the average down days over the last ten trading sessions. May natural gas futures had an average performance across all of the commodities in yesterday’s trade. Prices declined almost 15% YTD (year-to-date)—led by overproduction and weak demand.
The Energy Select Sector SPDR ETF (XLE) and the Spider Oil and Gas ETF (XOP) moved against the price movement of natural gas on Friday. XOP increased marginally by 0.02% and XLE declined by 0.57% on April 24. Lower natural gas prices impact gas producers like SandRidge Energy (SD), Stone Energy (SGY), and Cimarex Energy (XEC). These stocks have a natural gas production mix that’s greater than 50% of their total production portfolio. They account for 3.54% of XOP.
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