Energy

Natural Gas Price Slumps After Inventory Report

Paul Ausick

Published: January 14, 2016 11:05 am

Last Updated: January 13, 2020 3:03 pm

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 168 billion cubic feet for the week ending January 8. Analysts were expecting a storage withdrawal of around 170 billion cubic feet. The five-year average for the week is a withdrawal of around 178 billion cubic feet, and last year’s withdrawal for the week totaled 105 billion cubic feet. The withdrawal from storage totaled 113 billion cubic feet in the previous week.

Natural gas futures for February delivery traded down about 1.9% in advance of the EIA’s report, at around $2.24 per million BTUs, and traded around $2.17 after the data release. Last Thursday natural gas closed at $2.38 per million BTUs, and over the past five trading days the high for natural gas futures was posted last Friday at $2.50 per million BTUs. The 52-week range for natural gas is $1.80 to $3.62 per million BTUs. One year ago the price for a million BTUs was around $3.51.

A forecast for milder weather across the United States for the rest of January has weighed on the futures price since the beginning of this week. For the rest of this week, the forecast calls for milder temperatures along the East Coast, with the upper Midwest and the West seeing cooler temperatures. Overall, natural gas demand through next Thursday is expected to be higher, but forecast warmer temperatures on the heavily populated East Coast are likely to hold prices down through the end of the month.

Stockpiles are about 20.3% above their levels of a year ago and about 15.8% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.475 trillion cubic feet, around 474 billion cubic feet above the five-year average of 3.001 trillion cubic feet and 587 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.888 trillion cubic feet for the same period a year ago.

Here’s how share prices 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, traded up about 4.5%, at $79.12 in a 52-week range of $66.55 to $93.45.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 3% to $3.75. The stock’s 52-week range is $3.56 to $21.49, and the low was matched Thursday morning.

EOG Resources Inc. (NYSE: EOG) traded up about 2.8% to $65.94. The 52-week range is $61.35 to $101.36.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 3.8%, at $8.13 in a 52-week range of $6.91 to $16.93.