Natural Gas Inventory Posts Small Drawdown, Price Slips to YTD Low

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 114 billion cubic feet for the week ending February 10. Analysts were expecting a storage decline of around 124 billion cubic feet. The five-year average for the week is a withdrawal of around 156 billion cubic feet, and last year’s storage decline for the week totaled 163 billion cubic feet. Natural gas inventories fell by 152 billion cubic feet in the week ending February 3.

Natural gas futures for April delivery traded down by about 2% in advance of the EIA’s report, at around $2.88 per million BTUs, and they traded at $2.86 shortly after the data release. Natural gas closed at $3.04 per million BTUs on Wednesday, after falling from a high of $3.19 last Thursday. The 52-week range for natural gas is $2.47 to $3.83. One year ago the price for a million BTUs was around $3.36.

Demand for natural gas is expected to be low over the course of the next week as warmer weather will blanket most of the country. Along the west coast another rainstorm is brewing up, but that should have a short-lived effect. Overall temperatures in the United States should be about 15 to 30 degrees warmer than normal.

Stockpiles have now dropped to 11% below their levels of a year ago, and have reached 3.7% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.445 trillion cubic feet, around 87 billion cubic feet above the five-year average of 2.358 trillion cubic feet and 303 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.748 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 today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.5% at $82.78 in a 52-week range of $79.67 to $95.55.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 2% to $6.20. The stock’s 52-week range is $1.90 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.1% to $100.87. The 52-week range is $62.53 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.9%, at $7.23 in a 52-week range of $5.78 to $9.74.