Energy

Natural Gas Price Jumps 4% as Storage Drops More Than Expected

Paul Ausick

Published: January 7, 2016 11:25 am

Last Updated: January 13, 2020 3:19 pm

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 113 billion cubic feet for the week ending January 1. Analysts were expecting a storage withdrawal of around 100 billion cubic feet. The five-year average for the week is a withdrawal of around 129 billion cubic feet, and last year’s withdrawal for the week totaled 116 billion cubic feet. In the previous week, the withdrawal from storage totaled 58 billion cubic feet.

Natural gas futures for February delivery traded up about 1% in advance of the EIA’s report, at around $2.32 per million BTUs, and traded around $2.37 after the data release. Last Thursday, natural gas closed at $2.34 per million BTUs, and over the past four trading days the high for natural gas futures was posted last Thursday at $2.38 per million BTUs. The 52-week range for natural gas is $1.80 to $3.62. One year ago, the price for a million BTUs was around $3.41.

Natural gas futures closed at $2.27 per million BTUs on Wednesday and had been rising Thursday on forecasts for colder weather in the eastern United States next week. For the rest of this week, however, warmer-than-normal temperatures are expected to prevail east of the Mississippi River, while cooler temperatures are expected in the western half of the country.

Demand for natural gas is expected to reach its highest level of this heating season next week, with the arrival of a mass of very cold polar air moving into the Midwest on Saturday and spreading to the east and south beginning Monday.

Stockpiles are about 17.2% above their levels of a year ago and about 14.6% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.643 trillion cubic feet, around 464 billion cubic feet above the five-year average of 3.179 trillion cubic feet and 535 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 3.108 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.1%, at $77.57 in a 52-week range of $66.55 to $93.45.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.6% to $4.56. The stock’s 52-week range is $3.56 to $21.49.

EOG Resources Inc. (NYSE: EOG) traded up about 1.4% to $68.25. The 52-week range is $65.51 to $101.36, and the low was set Thursday morning.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 4%, at $8.81 in a 52-week range of $6.91 to $16.93.