Energy Economy

Natural Gas Price Ticks Lower After Massive Addition to Storage

Paul Ausick

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 94 billion cubic feet for the week ending August 28. Analysts were expecting a storage injection (increase) of 86 billion cubic feet. The five-year average for the week is an increase of around 61 billion cubic feet, and last year’s addition for the week totaled 79 billion cubic feet.

Natural gas futures for September delivery traded up about 1.1% in advance of the EIA’s report, at around $2.68 per million BTUs, and dropped slightly to $2.66 following release of the report. Last Thursday, natural gas closed at $2.68 per million BTUs, and over the past five trading days, natural gas futures peaked Tuesday at $2.77. The 52-week low for natural gas futures is $2.63, and is was posted Thursday morning. One year ago, the price for a million BTUs was around $3.83.

Temperatures are forecast to be warmer in the South and East over the next several days, while temperatures in the West are likely to cool off, lowering demand for air conditioning in California. Temperatures in the Midwest and west of the Mississippi River have been a few degrees warmer this past week, which likely raised demand for natural gas. While demand is not expected to skyrocket next week, it should still be moderately high.

Stockpiles are more than 18% above their levels of a year ago and about 4% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.193 trillion cubic feet, around 122 billion cubic feet above the five-year average of 3.071 trillion cubic feet and 495 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.698 trillion cubic feet for the same period a year ago.

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Here is how share prices 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 1.8%, at $74.57 in a 52-week range of $66.55 to $99.59.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 3.1% to $7.58. The stock’s 52-week range is $6.01 to $27.08.

EOG Resources Inc. (NYSE: EOG) traded up about 2.3% to $79.49. The 52-week range is $68.15 to $109.98.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 1.6%, at $12.65 in a 52-week range of $12.28 to $23.73.