For Immediate Release
Chicago, IL –May 29, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Gulfport Energy Corp. (GPOR - Free Report) , Antero Resources (AR - Free Report) , Southwestern Energy Company (SWN - Free Report) , Chesapeake Energy Corp. (CHK - Free Report) and Montage Resources Corp. (MR - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Strong Production, Mild Weather Keep Natural Gas Prices Low
The U.S. Energy Department's weekly inventory release showed a smaller-than-expected increase in natural gas supplies. However, the injection was higher than the five-year average as mild weather continues to limit heating and air conditioning demand.
Analysis: Less-than-Expected Rise in Storage
Stockpiles held in underground storage in the lower 48 states rose by 100 billion cubic feet (Bcf) for the week ended May 17, below the guidance (of 103 Bcf gain) as per the analysts surveyed by S&P Global Platts. However, the increase was higher than the five-year (2014-2018) average net injection of 88 Bcf and last year’s increase of 93 Bcf for the reported week.
The latest rise in inventories puts total natural gas stocks at 1.753 trillion cubic feet (Tcf) - 137 Bcf (8.5%) above 2018 levels at this time but 274 Bcf (13.5%) under the five-year average.
Fundamentally speaking, total supply of natural gas averaged around 93.6 Bcf per day, essentially unchanged on a weekly basis even as dry production edged down slightly. Meanwhile, daily consumption fell 2.5% to 75 Bcf primarily due to weaker residential/commercial demand.
Natural Gas Futures Remain Just Above $2.5
While natural gas futures have edged up a bit from the 3-year lows of below $2.5 per MMBtu in April and currently trade around $2.6 per MMBtu, it’s still 47% below the four-year high of $4.929 per MMBtu reached in mid-November.
The early onset of winter, together with the lowest level of stocks in 15 years, demand from power plants and growing LNG shipments lifted the commodity to almost $5 per MMBtu. But the euphoria didn’t last long as a mild weather led to smaller withdrawals that markedly reduced the storage deficit and sent prices lower.
What Is the Future of Natural Gas Prices?
The fundamentals of natural gas consumption continue to be favorable. The demand for cleaner fuels and the commodity’s relatively lower price has catapulted natural gas' share of domestic electricity generation to 35%, from 25% in 2011. Moreover, new pipelines to Mexico, together with large-scale liquefied gas export facilities have meant that exports out of the U.S. are set for a quantum leap. Finally, higher consumption from industrial projects will likely ensure strong natural gas demand.
However, record high production in the United States and expectations for explosive growth through 2020 means that supply will keep pace with demand. Therefore, prices are likely to trade sideways but for weather-driven movements. Also, with the traditional withdrawal season (when supplies fall on heating demand due to cold weather) having ended in March, consumption is likely to decline in the near term.
Want to Own a Natural Gas Stock Now?
The uncertain natural gas fundamentals (considering its seasonal nature) is responsible for the understandable reluctance on investors’ part to dip their feet into these stocks.
Moreover, most natural gas-heavy upstream companies like Gulfport Energy Corp., Antero Resources, Southwestern Energy Company, etc. carry a Zacks Rank #3 (Hold), which means that investors should preferably wait for a better entry point before buying shares in them. Some like Chesapeake Energy Corp. are further down the pecking order, with Zacks Rank #4 (Sell).
If you are looking for near-term natural gas play, Montage Resources Corp. might be a good selection. The company has a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This Irving, TX-based company has a good earnings surprise history, having surpassed estimates in three of the last four quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.