Bullish Inventory Forecast Causes Spike in Natural Gas (UNG)
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Price: $21.87 +2.68%
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
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United States Natural Gas ETF (NYSE: UNG) moved higher intraday on Tuesday as futures prices climbed to $2.95 per million btu. Today's spike is related to analyst estimates for below normal inventory buildups last week. The 5-year average build for this time of year is 72 bcf. However, stockpiles are expected to remain at subdued levels, with estimates ranging from 22 to 55 bcf, according to Reuters data.
EIA data last week showed that gas inventories for the week ended August 31 climbed to 3.402 trillion cubic feet, still a record high for this time of year, but fears of a major supply glut have faded somewhat.
Temperatures for the next 2 weeks are expected to be normal to slightly below normal, and this may limit upside in prices down the road if forecasts prove correct.
With a longer term view, natural gas prices may break above $4/Mcf (3.90 million btu) "at times" next year, according to Bernstein analyst Bob Brackett. He also reiterated his 2013 price forecast of $3.75/Mcf ($3.66 per million btu). Brackett cited low rig counts, bullish gas storage level outlook, and strong coal- to-gas switching returning in this fall. He remains "relatively bearish" long term with prices stagnating around $4/Mcf.
Bracket initiated coverage on several related gas stocks including Cabot Oil & Gas Corporation (NYSE: COG) and Range Resources Corporation (NYSE: RRC). He has an Outperform rating on both with price targets of $50 and $79, respectively.
United States Natural Gas (NYSE: UNG) is higher by 4.5 percent to 19.90.
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EIA data last week showed that gas inventories for the week ended August 31 climbed to 3.402 trillion cubic feet, still a record high for this time of year, but fears of a major supply glut have faded somewhat.
Temperatures for the next 2 weeks are expected to be normal to slightly below normal, and this may limit upside in prices down the road if forecasts prove correct.
With a longer term view, natural gas prices may break above $4/Mcf (3.90 million btu) "at times" next year, according to Bernstein analyst Bob Brackett. He also reiterated his 2013 price forecast of $3.75/Mcf ($3.66 per million btu). Brackett cited low rig counts, bullish gas storage level outlook, and strong coal- to-gas switching returning in this fall. He remains "relatively bearish" long term with prices stagnating around $4/Mcf.
Bracket initiated coverage on several related gas stocks including Cabot Oil & Gas Corporation (NYSE: COG) and Range Resources Corporation (NYSE: RRC). He has an Outperform rating on both with price targets of $50 and $79, respectively.
United States Natural Gas (NYSE: UNG) is higher by 4.5 percent to 19.90.
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