Is the Natural Gas Market Bound to Cool Down?

The price of natural gas slightly rose during last week. United States Natural Gas (UNG) also increased last week. Based on the recent U.S Energy Information Administration weekly update, the latest weekly natural gas injection was well above the five year average. Will natural gas resume its downward trend? Let’s examine the recent changes to the natural gas market.

During last week, the price of Henry Hub (short term delivery) slightly rose by 0.6%. Moreover, United States Natural Gas also increased by 0.66%. As of last week, the Henry Hub price still $0.57 per million BTUs above the price during the same week last year. Last week’s modest gain in the price of natural gas may have pulled up shares of natural gas related companies such as Cheniere Energy (LNG): During last week, Cheniere Energy’s stock increased by 1.3%.

Storage

According to the EIA’s latest weekly update, the underground natural gas storage rose by 82 Bcf and reached 981 Bcf. In comparison, last year, the storage rose by 43 Bcf; the five years average injection was 62 Bcf. Therefore, last week’s injection was higher than normal. The current storage for all lower 48 states is still 44.6% lower than last year’s storage and 50% below the 5-years average.

The rest of this analysis is at Seeking Alpha

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