Will Natural Gas Resume its Downward Trend?

The natural gas market hasn’t done much during last week following the sharp fall in natural gas prices a couple of weeks ago.  According to the latest EIA update, last week’s buildup in natural gas storage was roughly the same as the five year average. Will natural gas price resume its downward trend? Let’s analyze the latest developments in the natural gas market.

During last week, the Henry Hub (short term delivery) rose by 1.5%. Moreover, United States Natural Gas (UNG) also increased by 1.1%. As of last week, the price of Henry Hub was nearly $0.96 per million BTUs higher than the price during the same week in 2012. The recent rise of natural gas price may have slightly contributed to the rally of shares of major natural gas and oil producers such Chevron (CVX): During last week, Chevron‘s stock rose by 1.8%. If natural gas will keep rising it could lower the expected revenues of Chevron and thus positively affect the company’s value


Based on the recent EIA weekly report, the underground natural gas storage increased (for the twelfth consecutive week this season) by 72 Bcf to reach 2,605 Bcf. In comparison, the storage rose by 39 Bcf during the same week last year and by 73 Bcf based on the five years average. The current storage for all lower 48 states was 15.9% below last year’s storage and 1.1% below the 5-years average.

The rest of this analysis is at Seeking Alpha


For further reading see “Will Natural Gas Remain Low in 2013?”