Yahoo Finance Natural Gas Inventory: Will It Impact Natural Gas Prices?
What Are the Natural Gas Market's Key Supply and Demand Dynamics?
US natural gas inventory
On April 21, 2016, the EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report. It reported that the US natural gas inventory rose by 7 Bcf (billion cubic feet) to 2,484 Bcf between April 8, 2016, and April 15, 2016. Market surveys estimated that natural gas inventories could have risen by 2 Bcf for this period. The five-year average natural gas build was at 25 Bcf during this period. Natural inventories added 82 Bcf for the same period in 2015.
US natural gas inventory by region
The EIA divides the US into five storage regions—East, Midwest, Mountain, Pacific, and South Central. The natural gas inventory fell by 11 Bcf to 408 Bcf in the East region between April 8 and April 15, 2016. The weekly gas stockpile was almost flat at 538 Bcf in the Midwest region for the same period. The natural gas stockpile in the Mountain and Pacific regions rose marginally by 2 Bcf to 152 Bcf and 271 Bcf, respectively, for the same period. Natural gas stocks rose by 14 Bcf to 1,115 Bcf in the South Central region for the same period.
Impact
US natural gas inventories are 55% more than the same period in 2015. They’re also 49% higher than the five-year average during this period of the year. The high natural gas inventory could limit the upside for natural gas prices. To learn more about US natural gas prices, read the previous parts of the series. If La-Nina occurs in 2016 or 2017, it could influence natural gas prices after US natural gas inventories fall rapidly from the high levels. The US natural gas rig count and production also play a key role in driving natural gas prices. To learn more, read the next two parts of the series.
Lower natural gas prices impact upstream players’ margins like Vanguard Natural Resources (VNR), EXCO Resources (XCO), Ultra Petroleum (UPL), Memorial Production (MEMP), Cabot Oil & Gas (COG), and Gulfport Energy (GPOR).
The uncertainty in natural gas prices impacts ETFs and ETNs like the VelocityShares 3x Inverse Natural Gas ETN (DGAZ), the First Trust ISE-Revere Natural Gas (FCG), the Direxion Daily Natural Gas Related Bull 3X Shares (GASL), and the Fidelity MSCI Energy ETF (FENY).
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