Will Natural Gas Break Free From Its Current Price Range?

The natural gas market remained stagnate as the price of natural gas and United States Natural Gas (UNG) remained relatively unchanged on a weekly scale. According to the U.S Energy Information Administration, the recent natural gas injection was above the five year average. Does the gap between the recent injection and the five year average injection affect the weekly price of natural gas? Also, will natural gas break free from its current stagnation? Let’s examine these issues.

Last week, the price of natural gas inched down by 0.2%. Moreover, other natural gas related investments such as United States Natural Gas also edged down by 0.3%. Nonetheless, during the year, UNG has still out-performing natural gas by around 11 percentage points due to the Backwardation in the futures market.

Storage

According to EIA’s recent weekly report, the underground natural gas storage expanded by 106 Bcf and reached 1,266 Bcf. In comparison, last year, the storage rose by 89 Bcf; the five years average injection was 90 Bcf.

The table above shows that last week’s injection was above last year’s injection and the five year average injection.  Another way to look at the recent changes in the natural gas storage is to examine the changes in price of natural gas (weekly averages) and the gap between the recent storage changes and the 5-year average storage changes. The chart below does so.

The rest of this analysis is at Seeking Alpha

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