What Is Keeping the Price of Natural Gas High?

Last week’s injection to storage was higher than the five year average. This development, however, didn’t stop the price of natural gas and United States Natural Gas (UNG) to recover during last week. Will the ongoing higher than normal injections bring the natural gas storage to the 5-year average level by November? Let’s tackle this issue and examine the recent weekly changes in the natural gas market.

Last week, the price of natural gas rose by 3%. Moreover, other natural gas related investments such as Chesapeake Energy (CHK) and United States Natural Gas also increased by 3.7% and 3.4%, respectively. Nonetheless, during 2014, UNG has still out-performing natural gas by over 12 percentage points because of to the Backwardation in the futures market. 

Storage

According to EIA’s latest weekly update, the underground natural gas storage expanded by 114 Bcf and reached 1,380 Bcf. In comparison, last year, the storage rose by 88 Bcf; the five years average injection was 93 Bcf.

As you can see above, last week’s injection was well higher than last year’s injection and the five year average injection.

For the rest of the report see at seeking alpha

For further reading: