Another Big Gain in Natural Gas Inventory

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 90 billion cubic feet last week, compared with an expected build of about 96 billion cubic feet anticipated by analysts. Natural gas futures prices were trading up about 2% to Wednesday’s closing price in advance of the EIA’s report, at around $3.74 per million BTUs, and rose slightly to around $3.76 immediately following the EIA report.

The EIA reported that U.S. working stocks of natural gas totaled 3.58 trillion cubic feet, about 55 billion cubic feet higher than the five-year average of 3.52 trillion cubic feet. Working gas in storage totaled 3.72 trillion cubic feet for the same period a year ago. Natural gas inventories remain roughly in the middle of the five-year range. The five-year average increase for the period is 84 billion cubic feet.

Signals for natural gas demand have varied in the past week, with some forecasters predicting higher-than-normal temperatures in heavily populated parts of the country and other forecasters predicting cooler temperatures than usual. The futures markets appear to believe the cool-weather forecasts because natural gas futures prices are up about 5.7% in the past week. Tropical storm Karen had little impact on Gulf of Mexico production, and the prior week build of 101 billion cubic feet added to this week’s build of 90 billion cubic feet should add some downward pressure to futures prices.

Here is how stocks of the largest U.S. natural gas producers are reacting to today’s report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, is down 0.1%, at $85.05 in a 52-week range of $84.70 to $95.49.

Chesapeake Energy Corp. (NYSE: CHK) is up 1.9%. at $26.40 in a 52-week range of $16.23 to $27.46.

EOG Resources Inc. (NYSE: EOG) is up 1.4%, at $173.91 in a 52-week range of $107.76 to $174.86.

The U.S. Natural Gas Fund (NYSEMKT: UNG) is up 1.9% at $19.30 in a 52-week range of $16.59 to $24.09. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is up 1.6% at $47.65 in a 52-week range of $36.24 to $48.52. The first fund tracks spot prices; the second includes major drillers and services companies.