MW : Natural gas shares rise despite low commodity prices
Energy stocks took their cue from oil prices, which topped $74 a barrel to their highest point in a year, as bullish supply data and optimism about the economy continued to take hold.
Natural gas prices, however, held below $3 per million British thermal units, a seven-year low.
The NYSE Arca Natural Gas Index (XNG 470.86, +10.25, +2.23%) rose 0.8% to 464. Components Chesapeake Energy (CHK 23.82, +0.80, +3.48%) , Apache Corp. (APA 88.24, +2.38, +2.77%) , Questar (STR 34.79, +1.05, +3.11%) Ulta Petroleum (UPL 47.98, +1.21, +2.59%) and Anadarko (APC 53.27, +1.52, +2.94%) all rose 1.5% or more.
The NYSE Arca Oil Index (XOI 984.04, +25.45, +2.66%) rose 1.7% to 974, led by a 2% gain from oil major BP (BP 52.56, +1.41, +2.76%) as well as a 2.6% jump for Royal Dutch Shell (RDS .A 55.20, +1.85, +3.47%) and a nearly 3% rise from Total SA (TOT 57.23, +2.09, +3.79%) .
The Philadelphia Oil Service Index (OSX 179.61, +5.72, +3.29%) rose 1.9% to 177.
Oil prices touched their highest levels of the year, trading near $74 a barrel.
While oil and natural gas prices historically move up together, a boom on onshore gas production -- mostly immune from the season effects of hurricanes -- has contributed to a glut in supply.
The Department of Energy reported Thursday the amount of natural gas in storage for the week ended Aug. 14 grew to 3.204 trillion cubic feet, more than 20% above year-ago levels.
Natural gas producers have been signaling a storage glut for weeks -- following U.S. government forecasts from early this year.
Despite this trend, many leading companies such as Devon and Cheseapeake Energy boosted production over the past quarter nevertheless.
In a conference call with analysts on Aug. 4, Chesapeake CEO Aubrey McClendon said he opted against any production cutback during the second quarter.
"We're gonna be full up on storage by the end of the year," McClendon said. "It'll cause involuntary curtailment. There's no reason for us to voluntarily curtail gas when pretty soon everyone will have to do it on an involuntary basis. We didn't see any reason to take it on the chin for the team right now."
