The natural gas market remained relatively calm in the past week as the price of natural gas continues to range between $4.4 and $4.5. The injections to storage in the past eight weeks were higher than normal, but the price of natural gas remains elevated. Will the high injection to storage eventually bring down the price of natural gas? Also, do the changes in temperatures also impact the pace of buildup into storage during the injection season?
During the previous week, the price of natural gas inched down by 0.07%. Further, other natural gas related investments such as United States Natural Gas (UNG) and Chesapeake Energy (CHK) declined by 1.2% and 2.9%, respectively.
The sharp fall in UNG compared to the price of natural gas led to a slight contraction in the difference between the two, as demonstrated in the chart below. Nonetheless, the ongoing Backwardation in the futures market keeps the gap between UNG and natural gas close to 10%.
According the recent EIA weekly update, last week’s injection to storage was 100 Bcf; the underground natural gas storage was 1,929 Bcf – around 31% below the 5-year average. Last week’s injection was 32 Bcf or 47% higher than the 5-year average.
The rest of this analysis is at Seeking Alpha