Natural Gas Price Sharply Higher as Arctic Cold Moves In

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 112 billion cubic feet for the week ending December 22. Analysts were expecting a storage withdrawal of between 102 to 119 billion cubic feet. The five-year average for the week is a withdrawal of 111 billion cubic feet, and last year’s storage withdrawal for the week totaled 233 billion cubic feet. Natural gas inventories fell by 182 billion cubic feet in the week ending December 15.

Natural gas futures for February delivery traded up about 5.3% in advance of the EIA’s report, at around $2.88 per million BTUs, and traded up further at around $2.90 shortly afterward.

Colder Arctic weather is due for the rest of this week and most of next with the northern, central and eastern parts of the country especially hard hit. Very cold temperatures may also penetrate into the South. Only the west can look forward to cool (not cold) weather. Demand for natural gas is forecast to be very high.

Total U.S. stockpiles fell week over week to 1.8% below last year’s level and are now 2.5% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.332 trillion cubic feet, around 85 billion cubic feet below the five-year average of 3.417 trillion cubic feet and 62 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 today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up less than 0.1%, at $83.93 in a 52-week range of $76.05 to $91.34.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 2.5% to $3.98, in a 52-week range of $3.41 to $7.62.
  • EOG Resources Inc. (NYSE: EOG) traded down less than 0.1% to $108.24. The 52-week range is $81.99 to $109.66.

Also, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 5.8%, at $5.70 in a 52-week range of $5.10 to $9.74.