Energy Economy

Natural Gas Price Jumps 3% on Smaller-Than-Expected Inventory Increase

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 78 billion cubic feet for the week ending June 9. Analysts were expecting a storage injection of 89 billion cubic feet. The five-year average for the week is an injection of 87 billion cubic feet, and last year’s storage injection for the week totaled 68 billion cubic feet. Natural gas inventories rose by 106 billion cubic feet in the week ending June 2.

Natural gas futures for July delivery traded up about 0.1% in advance of the EIA’s report, at around $2.94 per million BTUs, and rose to around $3.01 shortly thereafter. The highest close for the past five trading days was registered last Friday at $3.04. The 52-week range for natural gas is $2.81 to $3.64. One year ago the price for a million BTUs was around $2.98.

Analysts at S&P Global Platts reported that power demand rose by an average of 2.1 billion cubic feet (Bcf) per day last week, with the majority of the gains coming in the mid-continent market (800,000 Bcf per day), the Northeast (700,000 Bcf per day) and the Southwest (800,000 Bcf per day). Demand for LNG feedgas rose by 500,000 Bcf per day last week.

Demand for the next week is expected to be moderate largely due to expected higher temperatures in the eastern half of the United States into the weekend. Cooler temperatures are expected across the northern and east central regions beginning early in the week.

Stockpiles fell week over week to 10.6% below last year’s level, but they remain 9.2% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.709 trillion cubic feet, around 228 billion cubic feet above the five-year average of 2.481 trillion cubic feet and 322 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.031 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 about 0.1%, at $82.01 in a 52-week range of $79.26 to $95.55.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 0.7% to $5.05. The stock’s 52-week range is $3.93 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded down about 1.0% to $88.04. The 52-week range is $78.04 to $109.37.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 2.6% at $6.80 in a 52-week range of $6.48 to $9.74.

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