Natural Gas Price Slips Following Lower-Than-Expected Inventory Drawdown

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 152 billion cubic feet for the week ending January 22. 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 115 billion cubic feet. The withdrawal from storage totaled 211 billion cubic feet in the previous week.

Natural gas futures for March delivery traded down about 2% in advance of the EIA’s report, at around $2.00 per million BTUs, and traded around $1.99 after the data release. Last Thursday natural gas closed at $2.18 per million BTUs, and over the past five trading days the high for natural gas futures was posted last Friday at $2.32 per million BTUs. The 52-week range for natural gas is $1.91 to $3.41. One year ago, the price for a million BTUs was around $3.24.

Milder weather in the forecast for the next week or so has chopped about 12% off natural gas prices since last week. Demand is expected to be only moderate through early next week.

Stockpiles are about 20% above their levels of a year ago and about 17.9% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.934 trillion cubic feet, around 445 billion cubic feet above the five-year average of 2.489 trillion cubic feet and 490 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.444 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 the latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down less than 0.1% at $78.47 in a 52-week range of $66.55 to $93.45.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 7.4% to $3.61. The stock’s 52-week range is $2.69 to $21.29.

EOG Resources Inc. (NYSE: EOG) traded up about 0.6% to $70.58. The 52-week range is $57.15 to $101.36.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.5%, at $7.43 in a 52-week range of $6.91 to $15.28.