Natural Gas Price Up on Hot Weather Forecast, Low Inventory Build

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 34 billion cubic feet for the week ending July 15. Analysts were expecting a storage addition in a range of 32 billion to 44 billion cubic feet. The five-year average for the week is an injection of around 61 billion cubic feet, and last year’s storage addition for the week totaled 59 billion cubic feet. Natural gas inventories rose by 64 billion cubic feet in the week ending July 8.

Natural gas futures for August delivery traded down about 0.1% in advance of the EIA’s report, at around $2.67 per million BTUs, and traded near $2.69 after the data release. Natural gas closed at $2.66 per million BTUs on Wednesday, after dropping from $2.80 on Monday. The 52-week range for natural gas is $1.99 to $3.18. One year ago the price for a million BTUs was around $3.10.

Hot summer temperatures are expected to dominate weather in the Lower 48 states as we head into the weekend and last for several days next week. Dangerously high heat index levels are possible for Texas and much of the south, central and eastern United States. Overall demand for natural gas is expected to be high to very high next week.

Stockpiles are about 17% above their levels of a year ago and about 21% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.277 trillion cubic feet, around 559 billion cubic feet above the five-year average of 2.718 trillion cubic feet and 471 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.806 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers reacting to this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up less than 0.1% at $94.00 in a 52-week range of $66.55 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 9.6% to $5.19. The stock’s 52-week range is $1.50 to $9.55.

EOG Resources Inc. (NYSE: EOG) traded up about 1.4% to $83.26. The 52-week range is $57.15 to $89.52.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) also traded up about 1.4%, at $7.94 in a 52-week range of $5.78 to $14.06.