Natural Gas Price Tumbles on Large Inventory Build

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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 May 22. Analysts expected a storage injection (increase) of between 97 billion and 101 billion cubic feet. The five-year average for the week is an increase of around 95 billion cubic feet.

Natural gas futures for July delivery traded down about 1.6% in advance of the EIA’s report, at around $2.79 per million BTUs, and slipped further to around $2.73 (down about 4.4% for the day) following release of the report. Last Thursday, natural gas closed at $2.96 per million BTUs, and natural gas futures rose to around $2.91 earlier this week. The 52-week low for natural gas futures is $2.48. One year ago, the price for a million BTUs was around $4.10.

Demand for heating has all but disappeared in the Lower 48 states. Warmer air over the eastern and southern United States could boost demand for cooling, but an early heat wave is no longer expected to show up. Next week looks to bring continued warmer temperatures, but not over a wide enough area to push demand for cooling. Overall demand for natural gas should remain low for the next several days.

Stockpiles are about 54% above their levels of a year ago and about 0.8% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.101 trillion cubic feet, around 18 billion cubic feet below the five-year average of 2.119 trillion cubic feet and 737 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.364 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.1% to $85.17, in a 52-week range of $82.68 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.6% to $14.38, in a 52-week range of $13.38 to $29.92.

EOG Resources Inc. (NYSE: EOG) traded down about 0.6% to $88.43. The 52-week range is $81.07 to $118.89.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down 3.9% to $13.24, in a 52-week range of $12.28 to $26.42.