Natural Gas Price Plunges on Low Storage Drawdown

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 49 billion cubic feet for the week ending December 30. Analysts were expecting a storage decline of between 72 billion and 83 billion cubic feet. The five-year average for the week is a withdrawal of around 107 billion cubic feet, and last year’s storage decline for the week totaled 131 billion cubic feet. Natural gas inventories fell by 237 billion cubic feet in the week ending December 23.

Natural gas futures for February delivery traded up by about 0.3% in advance of the EIA’s report, at around $3.28 per million BTUs, and traded around $3.21 immediately after the data release. Natural gas closed at $3.27 per million BTUs on Wednesday, after falling from a high of $3.88 last Thursday. The 52-week range for natural gas is $2.49 to $3.90. One year ago the price for a million BTUs was around $2.93.

Prices dropped by about $0.60 per million BTUs over the past five trading days, primarily as a result of revised weather forecasts calling for unseasonably warmer temperatures over the southern and eastern states beginning next Monday. Until then, colder weather will persist over most of the country. Demand for natural gas is expected to remain high through the weekend, then moderate with the expected warmer temperatures.

Stockpiles have now dropped to 10.9% below their levels of a year ago and 2.3% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.311 trillion cubic feet, around 21 billion cubic feet below the five-year average of 3.332 trillion cubic feet and 364 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.675 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 down about 0.5%, at $89.43 in a 52-week range of $71.55 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.6% to $7.11. The stock’s 52-week range is $1.50 to $8.20.

EOG Resources Inc. (NYSE: EOG) traded up about 0.4% to $104.05. The 52-week range is $57.15 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.4%, at $8.03 in a 52-week range of $5.78 to $9.74.