The oil company has been trading on a real low following the EIA report that was released regarding the expected decline in oil prices that might take place in the summer of 2015.
Chesapeake Energy Corporation was seen trading on quite a low share price on Friday, June 5, which was due to the negative report that emerged regarding the natural gas reserves that were seen to show unnatural highs and lows. According to a report by Energy Information Administration of the United States, it was seen that on June 4 the natural gas reserves increased by a massive amount that surprised the whole industry. The expectation from the gas reserves was to reach around 112 billion cubic feet, however, the actual reserves touched a massive 132 billion cubic feet as per the research of the EIA. This significant change in the amount of the natural gas was recorded as the largest increase in the gas reserves in the past ten years.
Only last week, it was seen that the natural gas reserves had increased to 112 billion cubic feet. Therefore, the total inventory of the natural gas has come around at 2.233 billion cubic feet. This is one of the most significant changes of the year, keeping in mind that last year the gas reserves were 50.6 percent less than what they are now, been reported to be around 1,482 billion cubic feet only.
On the other hand, the Natural Gas Supply Association has released a new research on the demand of natural gas that might surface in the current year. The annual outlook that is reported by the association every year looks quite positive this time around, believing the demand to be a record-setting one. One thing to be considered is that the increase in demand is not going to help the oil industry as analysts believe that the production expenses are also going to be seen on the surface.
In a report by the NGSA, it was explained that even though the demand is likely to increase, the price of natural gas is also expected to get affected on a big scale. Saying this, the prices are therefore expected to be going down on the scale more than they did in 2014. One more thing is that the fact price of production is also going to get increased cannot be ignored and it is expected that that too might break records.
On the other hand, since the supply is much more than the demand considering the high volume of natural gas in the current situation, it is expected that the oil prices go much lower than the present price natural gas is being traded on. Chesapeake shares have been taking a downward toll following this report which has made the share price reach the 52 week low of the stock at $12.8.
No comments:
Post a Comment