Natural Gas Price Remains Depressed Following Storage Report

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 33 billion cubic feet for the week ending November 24. Analysts were expecting a storage withdrawal of around 37 billion cubic feet. The five-year average for the week is a withdrawal of 47 billion cubic feet and last year’s storage withdrawal for the week totaled 50 billion cubic feet. Natural gas inventories fell by 46 billion cubic feet in the week ending November 17.

Natural gas futures for January delivery traded down about 3.5% in advance of the EIA’s report, at around $3.07 per million BTUs, and traded essentially flat shortly after the report was released. The highest close for the past five trading days was registered Tuesday at $3.13. The 52-week range for natural gas is $2.90 to $3.83. One year ago the price for a million BTUs was around $3.59.

Demand for the coming week is expected to be low as temperatures in the northern tier of states remain in a range of 30 to 50 degrees. The central and southern states are forecast to see mild weather, with highs in the 50 to 70 degree range. Colder air will arrive in the western states this weekend and then spread across the country as the week progresses. Demand will rise as the colder weather moves to more heavily populated areas of the country.

Total U.S. stockpiles fell week over week to 7.7% below last year’s level and are now 2.8% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.693 trillion cubic feet, around 107 billion cubic feet below the five-year average of 3.800 trillion cubic feet and 308 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 4.002 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 report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.8% to $82.94, in a 52-week range of $76.05 to $93.22.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 2.6%, at $4.16 in a 52-week range of $3.41 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded up about 1.4% to $101.87. The 52-week range is $81.99 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 3.2% at $6.11 in a 52-week range of $5.78 to $9.74.