For Immediate Release
Chicago, IL –August 20, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: EQT Corporation EQT, SilverBow Resources, Inc. SBOW, Montage Resources Corp. MR, Cabot Oil & Gas Corp. COG, Southwestern Energy Company SWN.
Here are highlights from Monday’s Analyst Blog:
Natural Gas Prices Kept in Check by Soaring Production
The U.S. Energy Department's weekly inventory release showed a smaller-than-expected increase in natural gas supplies, which led prices to be squeezed up, with an added push in the wake of favorable short-term temperature prediction. But the positive sentiment is unlikely to last and the commodity is expected to give way to pressure from rising production.
Supplies Grew by 49 Bcf
Stockpiles held in underground storage in the lower 48 states rose by 49 billion cubic feet (Bcf) for the week ended Aug 9, below the guidance (of 54 Bcf gain). However, the increase was higher than last year’s increase of 35 Bcf for the reported week and in line with the five-year (2014-2018) average net injection.
The latest rise in inventories puts total natural gas stocks at 2.738 trillion cubic feet (Tcf) - 357 Bcf (15%) above 2018 levels at this time but 111 Bcf (3.9%) under the five-year average.
Fundamentally speaking, total supply of natural gas averaged 96 Bcf per day, unchanged on a weekly basis as dry production remained flat. Daily consumption also remained essentially flat at 86.6 Bcf with 86.8 Bcf in the previous week on static power generation demand.
Prices Edge Up
The natural gas futures market rose following the smaller-than-expected climb in U.S. supplies, with the commodity posting a 3.8% weekly gain and erasing some of the steep losses that have taken it to lows not seen since May 2016 earlier this month. Weather forecasting models predicting hot temperatures in certain regions of the Lower 48 U.S. states that would drive up the air conditioning demand for natural gas also helped lift prices higher
Healthy Supplies to Restrict Major Rebound
The demand for cleaner fuels and the commodity’s relatively lower price has catapulted natural gas' share of domestic electricity generation to 35%, from 25% in 2011. Moreover, new pipelines to Mexico, together with large-scale liquefied gas export facilities have meant that exports out of the U.S. are set for a quantum leap. Finally, higher consumption from industrial projects will likely ensure strong natural gas demand.
However, record high production in the United States and expectations for healthy growth through 2020 means that supply will keep pace with demand. Therefore, prices are likely to trade sideways but for weather-driven movements.
Natural gas might experience short-lived surge based on positive weather forecasts but any powerful turnaround looks unlikely at the moment. With gas output in the lower 48 states recently hitting a record 92.1 Bcf per day, there is little room for prices to improve meaningfully from their current levels of around $2.20 per MMBtu.
Gas-Focused Equities Out of Favor
The bearish natural gas fundamentals and its seasonal nature is responsible for the understandable reluctance on investors’ part to dip their feet into these stocks.
Moreover, most natural gas-heavy upstream companies like EQT Corporation, SilverBow Resources, Inc., Montage Resources Corp., Cabot Oil & Gas Corp., Southwestern Energy Company, etc. carry a Zacks Rank #3 (Hold), which means that investors should preferably wait for a better entry point before buying shares in them.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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EQT Corporation (EQT) : Free Stock Analysis Report
Southwestern Energy Company (SWN) : Free Stock Analysis Report
Eclipse Resources Corporation (MR) : Free Stock Analysis Report
Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
SilverBow Resources Inc. (SBOW) : Free Stock Analysis Report
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