Natural Gas Rig Count Falls as Gas Prices Downtick

Rising Production and Stockpile Impact Natural Gas Prices

(Continued from Prior Part)

Natural gas rig count

Last week, Baker Hughes released its weekly crude oil and natural gas rig count report on Friday, July 31, 2015. The active US natural gas rig count fell by seven to 209 for the week ending July 31, 2015. Likewise, the gas rig count fell by two to 216 for the week ending July 24, 2015. The natural gas rig count fell for the fifth week in the last ten weeks.

Currently, natural gas rigs are 33% lower than the level of 318 last year. The falling rig count affects oil drillers like Superior (SPN), Schlumberger (SLB), and Halliburton (HAL). The recent slump in natural gas prices could also add more pressure to oil drillers. We could see more natural gas rigs idle. They also impact oil and gas ETFs like the Energy Select Sector SPDR ETF (XLE) and the SPDR Oil and Gas ETF (XOP).

EIA’s report

Last week, the EIA (U.S. Energy Information Administration) reported that the natural gas stockpile rose by 52 Bcf (billion cubic feet) to 2,880 Bcf for the week ending July 24, 2015. Last week, natural gas inventories rose by 61 Bcf to 2,828 Bcf for the week ending July 17, 2015. US gas inventories rose for 17 straight weeks. Slowing domestic demand and mild weather might have led to the rise in natural gas inventories.

Currently, the natural gas in storage is 25% more than the level of 2,294 Bcf in 2014. It’s also 3% more than the five-year average of 2,795 Bcf. The rising inventories, rising production, and mild weather will continue to influence natural gas prices.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Natural Gas Prices Fall Due to Excess Supply Estimates

• Part 3 - Natural Gas Prices Are Trading near the Key Support