Natural Gas Price Rises as Storage Growth Slowed

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 45 billion cubic feet for the week ending May 5. Analysts were expecting a storage injection of 53 billion cubic feet. The five-year average for the week is an injection of around 73 billion cubic feet, and last year’s storage injection for the week totaled 68 billion cubic feet. Natural gas inventories rose by 67 billion cubic feet in the week ending April 28.

Natural gas futures for June delivery traded up by about 2.4% in advance of the EIA’s report, at around $3.34 per million BTUs.  The June contract closed at $3.29 on Wednesday, the highest close for the past five trading days. The 52-week range for natural gas is $2.72 to $3.62. One year ago the price for a million BTUs was around $2.85.

In its monthly revision to the Short-Term Energy Outlook published Tuesday, the EIA said natural gas prices will rise this year as consumption and exports begin to outstrip supply. The price hikes are forecast to be modest, up 12 cents per million BTUs in the second quarter to an average of $3.16. The average price in the third quarter is now forecast to rise to $3.21, up 15 cents compared with the prior outlook.

For the full year, the EIA projects an average price of $3.17 per million BTUs, $0.66 more than the $2.51 average for 2016. The coal industry is expected to benefit from rising natural gas prices, with production forecast to rise by 5% this year and 1% next year.

Stockpiles fell week over week to 13.9% below last year’s level and are now 13.6% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.301 trillion cubic feet, around 275 billion cubic feet above the five-year average of 2.026 trillion cubic feet and 372 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.673 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 about 0.5% at $82.35 in a 52-week range of $80.30 to $95.55.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.4% to $5.72. The stock’s 52-week range is $3.56 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.5% to $89.35. The 52-week range is $77.66 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 3% at $7.80 in a 52-week range of $6.36 to $9.74.