| Natural Gas Settles at $2.49 per MMBtu on Warm Weather Estimates | |
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Low Natural Gas Prices: Slowing Demand and Oversupply Concerns (Part 1 of 3) Natural gas price movement
Below is our natural gas price fundamental analysis. For an in-depth look at natural gas and related companies, sectors, and drivers, please refer to our Energy and Power page.
NYMEX-traded May natural gas futures dropped by 1.62% on Monday. Natural gas prices hit a three-year low and settled at $2.49 per MMBtu (British thermal units in millions) on April 27, 2015. Prices slumped due to warm weather estimates. This might curb the demand for natural gas in the short term. Gas ETFs like the United States Natural Gas Fund LP ETF (UNG) fell by 2.52% and closed at $12.39 on Friday.
MDA Weather Services reported that weather across the lower 48 states in the US will have warm weather in the first week of May 2015. The warm weather will curb the heating demand for natural gas. The slowing demand will lead to an increase in inventories in the oversupplied gas market. The EIA (U.S. Energy Information Administration) published the weekly natural gas report on April 23, 2015. The weekly natural gas inventories increased by 90 Bcf (billion cubic feet). The inventories are increasing consistently and putting pressure on the gas prices.
Natural gas prices fell for the sixth time over the last ten days. Prices increased by 0.36% more on the average up days than on the average down days over the same period. May natural gas was the worst performer across all of the commodities. In contrast, silver was the top performer in yesterday’s trade. Gas prices declined 14.4% YTD (year-to-date)—led by massive supply and slowing demand.
Energy ETFs like the Energy Select Sector SPDR ETF (XLE) and the Spider Oil and Gas ETF (XOP) mirrored natural gas’ price movement. The decline in gas prices impacts oil and gas producers’ revenue like ExxonMobil (XOM), Stone Energy (SGY), and Cimarex Energy (XEC). These companies have a natural gas production mix that’s more than 47% of their total production portfolio. They account for 3.58% of XOP.
Continue to Part 2 Browse this series on Market Realist:
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Exxon Mobil is a and oil producing company based in United states of america. Exxon Mobil is listed in Germany, in United Kingdom and in United States of America. Its market capitalisation is US$ 488.4 billions as of today (€ 437.5 billions). Its stock quote reached its lowest recent point on March 14, 1997 at US$ 100.12, and its highest recent level on September 20, 2024 at US$ 115.27. Exxon Mobil has 4 237 270 016 shares outstanding. |