Yahoo Finance Natural Gas Inventories and Prices: Is There Any Relation?
What Are the Important Catalysts for Natural Gas?
Last week’s data
Natural gas (UNG) (UGAZ) (BOIL) (GASL) (FCG) inventories rose by 56 Bcf (billion cubic feet) for the week ending May 6, 2016—compared to the previous week, according to EIA (U.S. Energy Information Administration) data released on May 12, 2016. The inventories were at 2,681 Bcf—4.5% above the five-year average and 43.8% more than a year ago. The EIA will release inventory data for the week ending May 12 on Thursday, May 19.
Natural gas inventories and prices
In the last ten years, when natural gas inventories were higher than their five-year average, prices have weakened. Between November 2013 and April 2014, when the spread between inventory levels and their five-year average widened to the most in the last ten years, natural gas prices spiked to as high as $6.14.
Similarly, the downturn in natural gas prices since June 2008 could be linked to higher inventories compared to their five-year average. However, investors must note that the weather also plays an important role in driving natural gas prices in the short term, apart from long-term production and inventory dynamics in the longer term. We discussed natural gas prices and the weather in Part 1 of this series.
The above analysis could be important for natural gas–weighted stocks such as Gulfport Energy (GPOR), Comstock Resources (CRK), Rice Energy (RICE), Range Resources (RRC), and others.
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