Natural Gas Price Cuts Loss After Storage Report

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 49 billion cubic feet for the week ending September 23. Analysts were expecting a storage addition of around 55 billion cubic feet. The five-year average for the week is an injection of around 97 billion cubic feet, and last year’s storage addition for the week totaled 96 billion cubic feet. Natural gas inventories rose by 52 billion cubic feet in the week ending September 16.

Natural gas futures for November delivery traded down about 1% in advance of the EIA’s report, at around $2.97 per million BTUs, and traded near $3.03 after the data release. Natural gas closed at $3.00 per million BTUs on Wednesday, after posting a five-day high of $3.17 last Thursday. The 52-week range for natural gas is $2.17 to $3.17. One year ago the price for a million BTUs was around $2.88.

Natural gas prices have risen by nearly 50% since March, when prices fell to near $1.60 per million BTUs. Now that the summer cooling season is mostly behind us, demand will drop until the winter heating season kicks in around the first of November. Storage additions are well below year-ago levels and the five-year average for this time of year, but could still threaten the U.S. physical storage limit of 4.3 trillion cubic feet if production rises in the next few weeks.

Stockpiles remain about 2.6% above their levels of a year ago and 6.5% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.600 trillion cubic feet, around 220 billion cubic feet above the five-year average of 3.380 trillion cubic feet and 90 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 3.510 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 this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.8%, at $86.22 in a 52-week range of $71.55 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 5.4% to $6.39. The stock’s 52-week range is $1.50 to $9.55. The main reason for the big decline in Chesapeake stock is the company’s announcement of $850 million convertible note placement made earlier in the day.

EOG Resources Inc. (NYSE: EOG) traded up about 1.1% to $94.97. The 52-week range is $57.15 to $95.93.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.8%, at $8.54 in a 52-week range of $5.78 to $11.36.