Natural Gas Inventories Rise Sharply (XOM, CHK, EOG, UNG, OIH)

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The U.S. Energy Information Administration (EIA) today reported the US natural gas stocks rose by a total of 47 billion cubic feet, higher than the 38 billion cubic feet that analysts were expecting. Natural gas futures prices were flat in advance of the EIA’s report at $2.80/thousand cubic feet, but have dropped to around $2.70 following today’s report.

The EIA reported that U.S. working stocks of natural gas totaled 3.31 trillion cubic feet, about 357 billion cubic feet higher than the five-year average of 2.95 trillion cubic feet. Working gas in storage totaled 2.89 trillion cubic feet for the same period a year ago.

U.S. natural gas inventories are about 15% higher than they were a year ago and about 12% higher than the 5-year average. Both figures are lower than they were a week ago, which indicates that the supply is falling. However, gas in storage remains at record highs for this time of year.

Natural gas futures prices are about 47% higher than they were at their low point of $1.90/thousand cubic feet in April of this year. Working gas in storage remains above the high end of the 5-year average, but the gap is narrowing.

Here’s 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 about 0.5% at $87.33 in a 52-week range of $67.93-$88.91.

Chesapeake Energy Corp. (NYSE: CHK) is down about 2% at $19.51 in a 52-week range of $13.32-$33.87.

EOG Resources Inc. (NYSE: EOG) is down about 0.6% at $108.21 in a 52-week range of $66.81-$119.97.

The US Natural Gas Fund (NYSEMKT: UNG) is down about 4.6% at $18.52 in a 52-week range of $14.25-$41.60. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down about 0.3% at $41.20 in a 52-week range of $32.54-$45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Paul Ausick