Second Consecutive Massive Gain in Natural Gas Supply

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 101 billion cubic feet last week, compared with an expected build of about 95 billion cubic feet anticipated by analysts. Natural gas futures prices were trading flat to Wednesday’s closing price in advance of the EIA’s report, at around $3.54 per million BTUs, and slipped to around $3.50 immediately following the EIA report.

The EIA reported that U.S. working stocks of natural gas totaled 3.49 trillion cubic feet, about 49 billion cubic feet higher than the five-year average of 3.43 trillion cubic feet. Working gas in storage totaled 3.64 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 82 billion cubic feet.

Natural gas prices rose sharply on Wednesday as a tropical storm now named Karen began to develop in the Gulf of Mexico. The projected path of the storm has been forecast to lie east of most of the Gulf rigs and platforms, and natural gas prices lost nearly $0.07 per million BTUs yesterday. The second consecutive massive build in inventories will weigh further on natural gas 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 0.4%, at $85.71 in a 52-week range of $84.70 to $95.49.

Chesapeake Energy Corp. (NYSE: CHK) is down 0.5%, at $26.04 in a 52-week range of $16.23 to $27.46.

EOG Resources Inc. (NYSE: EOG) is down 0.5%, at $171.52 in a 52-week range of $107.76 to $173.92.

The U.S. Natural Gas Fund (NYSEMKT: UNG) is down 1.1%, at $18.01 in a 52-week range of $16.59 to $24.09. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down 1%, at $47.58 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.