Natural Gas Inventory Growth Threatened by Pipeline Capacity

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 114 billion cubic feet for the week ending May 23, compared with an expected increase of around 107 to 111 billion cubic feet anticipated by analysts.

Natural gas futures prices were trading up about 0.2% in advance of the EIA’s report, at around $4.62 per million BTUs, and slipped about 1.8% to around $4.53 immediately following the report.

For the same week a year ago, stockpiles rose by 88 billion cubic feet, and the five-year average for the week is an increase of 93 billion cubic feet. Stockpiles are about 38% below their levels of a year ago and nearly 43% below the five-year average.

Natural gas producers want to produce more gas but have so far been constrained by the lack of pipeline capacity. Production is at or near record highs, but so is demand. And the shortage of pipeline capacity means that it is more difficult to raise injections into storage.

The EIA reported that U.S. working stocks of natural gas totaled 1.38 trillion cubic feet, about 922 billion cubic feet below the five-year average of 2.3 trillion cubic feet. Working gas in storage totaled 2.13 trillion cubic feet for the same period a year ago. Natural gas inventories are rising again, but they remain well below the bottom of the five-year range.

Here is how stocks of the largest U.S. natural gas producers reacted to this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was up about 0.1% to $101.17, in a 52-week range of $84.79 to $103.45.

Chesapeake Energy Corp. (NYSE: CHK) was down about 0.4%, at $28.31 in a 52-week range of $19.32 to $30.48.

EOG Resources Inc. (NYSE: EOG) was up about 0.1% to $105.32. The 52-week range is $62.27 to $106.50.

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