Natural Gas Price Jumps on Record Storage Withdrawal

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 359 billion cubic feet for the week ending January 5. This is the largest one-week storage withdrawal on record.

Analysts were expecting a storage withdrawal of around 318 billion cubic feet. The five-year average for the week is a withdrawal of 170 billion cubic feet, and last year’s storage withdrawal for the week totaled 136 billion cubic feet. Natural gas inventories fell by 206 billion cubic feet in the week ending December 29.

Natural gas futures for February delivery traded up about 3.8% in advance of the EIA’s report, at around $3.02 per million BTUs, and moved up to around $3.04 shortly after the report was released.

The frigid conditions of the past two weeks in the northeast are finally giving way to more moderate temperatures, until early next week when the heavily populated region is expected once again to see colder weather. Overall demand for the next week is forecast to be in the “high” range.

Total U.S. stockpiles fell week over week to 13% below last year’s level and are now also 12% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.767 trillion cubic feet, around 382 billion cubic feet below the five-year average of 3.149 trillion cubic feet and 415 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.182 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 1.1%, at $87.00 in a 52-week range of $76.05 to $87.41.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 3.6%, at $4.15 in a 52-week range of $3.41 to $7.29.
  • EOG Resources Inc. (NYSE: EOG) traded up about 2.1% to $114.40. The 52-week range is $81.99 to $114.86, a new high posted this morning.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 4.1%, at $23.93 in a 52-week range of $20.40 to $35.00.