Natural Gas Market Is Impacted by Inventory and Rig Count Data
Natural gas price action
This series analyzes natural gas prices and fundamentals. For an in-depth fundamental look at oil and gas and related companies, sectors, and drivers, please refer to our Energy and Power page.
October natural gas futures contracts trading in NYMEX rose by 1.13% and closed at $2.68 per MMBtu (British thermal units in millions) on September 10, 2015. Prices rose due to the less-than-expected rise in inventory data. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) followed the direction of natural gas prices in yesterday’s trade. These ETFs rose slightly by 0.80% and settled at $12.65 on September 10, 2015.
On Thursday, September 10, 2015, the EIA (U.S. Energy Information Administration) published its weekly natural gas in storage report. The EIA reported that the natural gas stockpile rose by 68 Bcf (billion cubic feet) for the week ending September 4, 2015. Market surveys estimated that the natural gas stockpile could rise by 77 Bcf for the same period. The less-than-expected inventory increase led to the rise in natural gas prices.
Weather reports suggest that warm weather is expected in the southern parts of the US over the next few days. In contrast, mild weather is estimated across the Great Lakes, Northeast, and Midwest regions of the US as the week progresses. Warm weather could support natural gas prices in the short term.
Natural gas prices rose for the fifth time in the last ten trading sessions. Prices fell by 0.40% more on the down days than on the up days over the last ten days. October natural gas prices fared well across other commodities in Thursday’s trade. Prices fell more than 6% YTD (year-to-date) due to oversupply concerns.
Natural gas producers like Southwestern Energy (SWN), EXCO Resources (XCO), and Rice Energy (RICE) benefit from rising natural gas prices. Combined, they account for 2.70% of the SPDR Oil and Gas ETF (XOP). These stocks’ natural gas output mix is greater than 86% of their total production.
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