Natural Gas Inventories Rise, Price Move Up Sharply

The US Energy Information Administration today reported the US natural gas stocks rose by a total of 57 billion cubic feet, above the 52 billion cubic feet increase that analysts had expected. Natural gas prices are up more than 6% this morning, at $2.87/thousand cubic feet.

The EIA reported that US working stocks of natural gas totaled 3.06 trillion cubic feet, about 613 billion cubic feet higher than the five-year average of 2.45 trillion cubic feet. Working gas in storage totaled 2.41 trillion cubic feet for the same period a year ago.

US natural gas inventories are about 27% higher than they were a year ago and about 25% higher than the 5-year average. Both figures are lower than they were a week ago.

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, is down about -1.3% at $82.15 in a 52-week range of $67.03-$87.94. Chesapeake Energy Corp. (NYSE: CHK) is up about 0.2% at $17.96 in a 52-week range of $13.32-$35.75. EOG Resources Inc. (NYSE: EOG) is down about -1.2% at $84.67 in a 52-week range of $66.81-$119.97.

The US Natural Gas Fund (NYSEMKT: UNG) is down about -2.8% at $18.48 in a 52-week range of $14.25-$46.40. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down about -0.5% at $33.86 in a 52-week range of $32.54-$45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Comments yesterday from the CEO of Exxon that the company was “losing our shirts” on natural gas production probably have had more impact on producers’ share prices than today’s storage increase. What seems clear is that producers won’t be able to rein in production enough to lift prices even to a break-even point by the end of the year.

Paul Ausick