Natural Gas Market Is Influenced by Weather and Inventory
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 2.07% and closed at $2.71 per MMBtu (British thermal units in millions) on September 8, 2015. Prices rose for the second day due to hot weather estimates. Gas tracking ETFs like the United States Natural Gas Fund LP ETF (UNG) also moved in the direction of natural gas prices. It rose by 2.07% and closed at $12.77 on September 8, 2015.
MDA Weather Services reported that the weather is expected to be above normal in the North-Atlantic coast of the US during the third week in September 2015. Warm weather is also anticipated across the Northeast and West regions of the US. Warm weather could boost the demand for natural gas from electric power plants. It could benefit natural gas prices.
Last week, the EIA (U.S. Energy Information Administration) published that the natural gas inventory rose by 94 Bcf (billion cubic feet) for the week ending August 28, 2015. The EIA will release the next natural gas in storage report on September 10, 2015. Market surveys project that natural gas stocks could rise by 80 Bcf (billion cubic feet) for the week ending September 4, 2015.
Natural gas prices rose for the fifth time in the last ten trading sessions. Prices fell by 0.33% more on the down days than on the up days in the last ten days. September natural gas futures were the top performers across other commodities in yesterday’s trade. Prices fell by 6.65% YTD (year-to-date) due to oversupply concerns.
Oil and gas producers like Southwestern Energy (SWN), EQT (EQT), and Rice Energy (RICE) are impacted positively by rising natural gas prices. These companies account for 2.85% of the SPDR Oil and Gas ETF (XOP). These stocks also have a natural gas production mix that’s greater than 86% of their production portfolio.
Browse this series on Market Realist: