Natural Gas Price Dip Following Larger-Than-Expected Storage Report

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 67 billion cubic feet for the week ending April 28. Analysts surveyed by S&P Global Platts were expecting a storage injection of 61 billion cubic feet. The five-year average for the week is an injection of around 63 billion cubic feet, and last year’s storage injection for the week totaled 68 billion cubic feet. Natural gas inventories rose by 74 billion cubic feet in the week ending April 21.

Natural gas futures for June delivery traded down by about 1% in advance of the EIA’s report, at around $3.22 per million BTUs, and traded around $3.20 shortly after the data release. Natural gas closed at $3.23 per million BTUs on Wednesday. The highest close for the past five trading days was $3.28 last Friday. The 52-week range for natural gas is $2.72 to $3.62. One year ago the price for a million BTUs was around $2.92.

Demand picked up last week across the majority of the country, led by stronger heating load across the major population centers of the Midwest and Northeast, leading to a smaller build.

Mitch DeRubis, a quantitative modeling analyst with Platts Analytics, said:

Residential and commercial load pushed 2.2 Bcf/d [billion cubic feet per day] higher compared to the previous week, which was slightly offset by a 0.8 Bcf/d decline in power burn demand during the week. The change in demand was driven by temperatures, as the majority of the country cooled off slightly after the warm spell that covered most of the country from the prior week. The lower demand cut into injection activity, especially in the East and Mountain regions.

Stockpiles fell week over week to 13.7% below last year’s level, and they are now 15.5% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.256 trillion cubic feet, around 303 billion cubic feet above the five-year average of 1.953 trillion cubic feet and 359 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.615 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 this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.9%, at $81.96 in a 52-week range of $80.30 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 8.6% to $5.07. The stock’s 52-week range is $3.56 to $8.20. Chesapeake reported first-quarter earnings this morning that were better than expected.

EOG Resources Inc. (NYSE: EOG) traded down about 2.6% to $89.35. The 52-week range is $77.04 to $109.37.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.1%, at $7.43 in a 52-week range of $6.36 to $9.74.