Natural Gas Price Dips Following Large Addition to Storage

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The U.S. Energy Information Administration (EIA) reported Friday morning that U.S. natural gas stocks increased by 72 billion cubic feet for the week ending June 30. Analysts were expecting a storage injection of between 57 billion and 69 billion cubic feet. The five-year average for the week is an injection of 66 billion cubic feet, and last year’s storage injection for the week totaled 39 billion cubic feet. Natural gas inventories rose by 46 billion cubic feet in the week ending June 23.

Natural gas futures for August delivery traded up about 1.2% in advance of the EIA’s report, at around $2.93 per million BTUs, and slipped to around $2.89 shortly thereafter. The highest close for the past five trading days was registered last Thursday and Friday at $3.04. The 52-week range for natural gas is $2.82 to $3.62. One year ago the price for a million BTUs was around $3.12.

Domestic demand for natural gas in the week ahead is expected to be high as hot high pressure systems dominate the western, central and southern United States with highs ranging from the upper 80s to the 100s. The Great Lakes area and the northeastern states will be spared until the middle of next week when the hot temperatures spread to all but small corners in the northwestern and northeastern parts of the country.

Stockpiles fell week over week to 9% below last year’s level, but remain 6.9% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.888 trillion cubic feet, around 187 billion cubic feet above the five-year average of 2.701 trillion cubic feet and 285 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.173 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 this latest report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.3%, at $79.89 in a 52-week range of $79.26 to $95.55.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 4.2% to $4.46. The stock’s 52-week range is $4.17 to $8.20.
  • EOG Resources Inc. (NYSE: EOG) traded down about 1.4% to $87.38. The 52-week range is $78.04 to $109.37.

Also, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 0.5%, at $6.48 in a 52-week range of $6.43 to $9.74.