Is Natural Gas Changing Course?

The price of natural gas has declined again during last week.  United States Natural Gas (UNG) has also followed and decreased. Due to the holiday season the U.S Energy Information Administration didn’t release its weekly report only the change in natural gas storage. During last week, the natural gas extraction from storage was well below the five year average withdrawal. Will natural gas continue to fall? Let’s examine the recent changes in the natural gas market.

During last week (up-to-date), the price of Henry Hub (short term delivery) tumbled down by 2.34%. Furthermore, United States Natural Gas also fell by 1.2%. As of last week, the Henry Hub price was still $1.17 per million BTUs higher than the price during the same week in 2012. This month’s drop of natural gas may have contributed to the fall of shares of gas and oil producers such as Chevron (CVX): During the previous week, Chevron‘s stock fell by 0.7%. If natural gas price continues to fall, this could cut down Chevron‘s expected revenues and may slightly reduce the company’s valuation.

UNG has under-performed the price of natural gas by roughly 17 percentage points due to Contango that led to roll-decay.

The rest of this analysis is at Seeking Alpha

For further reading see: