Natural Gas Price Ticks Down on Storage Addition

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 30 billion cubic feet for the week ending August 25. Analysts surveyed by S&P Global Platts were expecting a storage injection of 29 billion cubic feet. The five-year average for the week is an injection of 67 billion cubic feet, and last year’s storage withdrawal for the week totaled 46 billion cubic feet. Natural gas inventories rose by 43 billion cubic feet in the week ending August 18.

Natural gas futures for October delivery traded roughly flat in advance of the EIA’s report, at around $2.933 per million BTUs, and slipped to $2.928 shortly afterward. The highest close for the past five trading days was registered Tuesday at $2.98. The 52-week range for natural gas is $2.80 to $3.62. One year ago the price for a million BTUs was around $3.03.

S&P Global Platts noted that much of the impact of Hurricane Harvey on natural gas supplies won’t be recognized in the data until next week. Onshore production and liquefied natural gas (LNG) sendout increased to offset an estimated decline of 207 million cubic feet per day in offshore production, with about 70% of the decline occurring in the southeast and the remainder in Texas, in anticipation of the coming storm.

The decline in southeast and Texas production is estimated to have come before the corresponding drop in demand related to weather and corresponded with an increase in total demand in the regions. This likely resulted in a relatively tighter market that required heavier storage withdrawals.

Overall demand is expected to be moderate next week with only the interior west and west coast seeing unusually warm temperatures.

Stockpiles fell week over week to 7% below last year’s level, but they remain 0.3% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.55 trillion cubic feet, around 8 billion cubic feet above the five-year average of 3.147 trillion cubic feet and 239 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.394 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 0.3%, at $76.32 in a 52-week range of $76.05 to $93.22.
  • Chesapeake Energy Corp. (NYSE: CHK) was up about 2.2% to $3.69. The stock’s 52-week trading range is $3.55 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded up about 1.2% to $84.64. The 52-week range is $81.99 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 0.2%, at $6.53 in a 52-week range of $6.20 to $9.74.