Energy

Huge Inventory Increase Crushes Natural Gas Prices

Blue flames of gas stove
Source: Thinkstock
The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 112 billion cubic feet for the week ending September 26. That compared with an expected increase of about 107 billion cubic feet anticipated by analysts. The five-year average injection for the week is 85 billion cubic feet.

Natural gas futures were trading down about 0.6% in advance of the EIA’s report, at around $4.00 per million BTUs, and tumbled to around $3.93 immediately following the EIA report. Natural gas futures have slipped by about $0.05 per million BTUs since last week.

Stockpiles are about 10.7% below their levels of a year ago and about 11.4% below the five-year average. The rise in U.S. stockpiles is still on course for a record April through October injection. The start of the heating season is still expected to see U.S. stockpiles at around 3.55 trillion cubic feet, the lowest level since 2008 but still adequate. Last year’s injection season ended with 3.8 trillion cubic feet in inventory.

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Natural gas prices got something of a boost earlier this week on forecasts for cooler weather in the eastern half of the United States, but the drop in temperature is now expected to be lower than originally thought.

The EIA reported that U.S. working stocks of natural gas totaled 3.1 trillion cubic feet, about 399 billion cubic feet below the five-year average of 3.5 trillion cubic feet. Working gas in storage totaled 3.47 trillion cubic feet for the same period a year ago. Natural gas inventories continue to rise, but remain below the bottom of the five-year range.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was down about 0.3%, at $92.62 in a 52-week range of $84.79 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) was down nearly 3% to $21.77, after posting a new 52-week low of $21.71. The 52-week high is $29.92.

EOG Resources Inc. (NYSE: EOG) was down 1.8% to $95.09. The 52-week range is $78.01 to $118.89.

The United States Natural Gas ETF (NYSEMKT: UNG) was down about 2%, at $21.13 in a 52-week range of $16.91 to $27.89.

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