Natural Gas Supply, Price Both Fall

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 195 billion cubic feet for the week ending March 7. That compared with an expected drop of 193 to 197 billion cubic feet anticipated by analysts. Natural gas futures prices were trading about 1.5% lower in advance of the EIA’s report, at around $4.42 per million BTUs, and slipped a penny immediately following the report.

A late winter storm is smashing into the Midwest and Eastern U.S. today, but its impact will not last beyond a day or two. Warmer temperatures, perhaps even above normal temperatures, are on the way and that should put a damper on natural gas prices.

The country’s natural gas supply is very likely to fall below a trillion cubic feet the end of this week. That doesn’t mean much, but it has not happened in nearly 10 years. Last week’s inventory level was 958 billion cubic feet below last year’s level.

The EIA reported that U.S. working stocks of natural gas totaled 1.0 trillion cubic feet, about 858 billion cubic feet below the five-year average of 1.96 trillion cubic feet. Working gas in storage totaled 1.2 trillion cubic feet for the same period a year ago. Natural gas inventories continue to drop further below the bottom of the five-year range.

Here is how stocks of the largest U.S. natural gas producers reacted to this report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was down about 0.5%, at $93.72 in a 52-week range of $84.79 to $101.74.

Chesapeake Energy Corp. (NYSE: CHK) was up 0.7%, at $25.30 in a 52-week range of $18.21 to $29.06.

EOG Resources Inc. (NYSE: EOG) was up 0.4%, at $185.82. The 52-week range is $112.05 to $193.22.

The U.S. Natural Gas Fund (NYSEMKT: UNG) was down about 1.9%, at $24.50 in a 52-week range of $16.59 to $27.89. The Market Vectors Oil Services ETF (NYSEMKT: OIH) was down 1.2%, at $47.51 in 52-week range of $39.42 to $51.11. The first fund tracks spot prices; the second includes major drillers and services companies.