Natural Gas Price Sets Annual Low Ahead of Storage Increase

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 2 billion cubic feet for the week ending December 1. Analysts were expecting a storage withdrawal of between 3 billion and 12 billion cubic feet. The five-year average for the week is a withdrawal of 69 billion cubic feet, and last year’s storage withdrawal for the week totaled 42 billion cubic feet. Natural gas inventories fell by 33 billion cubic feet in the week ending November 24.

Natural gas futures for January delivery traded down about 4.6% in advance of the EIA’s report, at around $2.79 per million BTUs, and traded down a penny shortly afterward. The highest close for the past five trading days was registered last Friday at $3.06. The 52-week range for natural gas is $2.77 to $3.83, and the low was posted this morning. One year ago the price for a million BTUs was around $3.65.

Prices are falling as updated weather forecasts indicate a return to mild weather after a cold spell in the heavily populated eastern United States. Natural gas futures closely track winter weather forecasts, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.

Total U.S. stockpiles fell week over week to 6.7% below last year’s level and are now 1% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.695 trillion cubic feet, around 36 billion cubic feet below the five-year average of 3.731 trillion cubic feet and 264 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.959 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 today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.1%, at $82.37 in a 52-week range of $76.05 to $93.22.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down less than 0.1%, at $3.77 in a 52-week range of $3.41 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.2% to $99.02. The 52-week range is $81.99 to $109.37.

Also, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 4.2%, at $5.54 in a 52-week range of $5.50 to $9.74. The low was set this morning.