The natural gas market has rallied during last week. Based on the recent EIA update, last week’s buildup in natural gas storage was very close to the five year average buildup. Will natural gas price continue to rise? Let’s examine the latest changes in the natural gas market.
During the previous week, the price of Henry Hub (short term delivery) increased by 2.8%. Moreover, United States Natural Gas (UNG) also rose by 2.4%. As of last week, the Henry Hub price was nearly $0.70 per million BTUs higher than the price last year. The recovery of natural gas may have contributed to the rise of shares of gas and oil producers such Royal Dutch Shell (RDS.A): During the previous week, Shell‘s stock slightly increased by 0.3%. If natural gas further rises, this could raise the expected revenues of Shell and thus positively affect the company’s value.
According to the recent EIA weekly update, the underground natural gas storage increased (for the twentieth consecutive week this season) by 67 Bcf to reach 3,130 Bcf. In comparison, during last year the storage rose by 66 Bcf; the five years average increased by also 66 Bcf. The current storage for all lower 48 states is 7% below last year’s storage and 1.5% higher than the 5-years average.
The rest of this analysis is at Seeking Alpha
For further reading see “Will Natural Gas Remain Low in 2013?”