Natural Gas Price Turns Higher on Small Storage Increase

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 24 billion cubic feet for the week ending July 20.

Analysts were expecting a storage injection of around 35 billion cubic feet. The five-year average for the week is an injection of 43 billion cubic feet, and last year’s storage increase for the week totaled 16 billion cubic feet. Natural gas inventories rose by 46 billion cubic feet in the week ending July 13.

Natural gas futures for September delivery traded down about 0.2% in advance of the EIA’s report, at around $2.75 per million BTUs, and rose to $2.77 shortly after the report was released.

For the period between July 26 and August 1, once again predicts “high” demand and offers the following outlook:

Strong upper high pressure continues to dominate the western and southern US with highs of 90s to 110°F, hottest from California to Texas for strong regional demand. A warm and wet weather system will exit the East with showers ending, while a cooler system upstream will sweep through the Midwest and east-central US with showers and comfortable highs of 70s to lower 80s, including into the South this weekend. Overall, demand will be HIGH easing to MODERATE.

In its most recent Short-Term Energy Outlook, the EIA forecast that natural gas in working inventory will be 3.47 trillion cubic feet at the end of October, 10% below the five-year average and 9% lower than the year-ago level. The winter heating season runs from November through March, during which gas is typically withdrawn from storage, and the injection season runs from April through October.

Total U.S. stockpiles rose week over week to 23.7% below last year’s level and are now 19.7% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.273 trillion cubic feet at the end of last week, around 557 billion cubic feet below the five-year average of 2.830 trillion cubic feet and 705 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.978 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers reacted to today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.2% to $83.75, in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded flat at $4.41, in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.1% to $128.49. The 52-week range is $81.99 to $129.69, a new high set earlier this morning.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 0.6%, at $22.73 in a 52-week range of $20.40 to $27.92.

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