Natural Gas Price Tumbled 10% Since Last Week, Storage Increase Doesn’t Help

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 54 billion cubic feet for the week ending October 28. Analysts were expecting a storage addition of between 49 and 59 billion cubic feet. The five-year average for the week is an injection of around 63 billion cubic feet, and last year’s storage addition for the week totaled 56 billion cubic feet. Natural gas inventories rose by 73 billion cubic feet in the week ending October 21.

Natural gas futures for November delivery traded down less than 0.1% in advance of the EIA’s report, at around $2.79 per million BTUs, and traded near $2.82 after the data release. Natural gas closed at $2.79 per million BTUs on Wednesday, after posting a five-day high on Monday of $3.16. The 52-week range for natural gas is $2.17 to $3.37. One year ago the price for a million BTUs was around $2.89.

Warmer-than-average temperatures have weighed on natural gas prices for the past two weeks, and the pattern looks to continue through next week as well. The November contract reached a 52-week high of $3.37 per thousand cubic feet just two weeks ago.

In the near term, demand for natural gas is expected to be low again next week temperatures reach into the 50s and 60s in the northern part of the country and up to 70s and 80s in the south.

Stockpiles remain about 1.2% above their levels of a year ago and 4.6% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.963 trillion cubic feet, around 173 billion cubic feet above the five-year average of 3.790 trillion cubic feet and 48 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 3.915 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 up about 0.1%, at $83.54 in a 52-week range of $71.55 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.2% to $5.38. The stock’s 52-week range is $1.50 to $8.15. Shares traded as high as $5.80 early in the session, following a better-than-expected report on third-quarter results.

EOG Resources Inc. (NYSE: EOG) traded up about 0.4% to $91.29. The 52-week range is $57.15 to $98.32.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 0.4%, at $7.53 in a 52-week range of $5.78 to $10.10.