Natural Gas Price Tumbles on Low Storage Withdrawal

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 183 billion cubic feet for the week ending January 12.

Analysts expected a storage withdrawal of around 201 billion cubic feet. The five-year average for the week is a withdrawal of 203 billion cubic feet, and last year’s storage withdrawal for the week totaled 243 billion cubic feet. Natural gas inventories fell by a record 359 billion cubic feet in the week ending December 29.

Natural gas futures for February delivery traded down about 1.5% in advance of the EIA’s report, at around $3.18 per million BTUs, and slipped to around $3.13 shortly after the report was released.

Temperatures are expected to moderate over most of the country this week, although it will remain cold over the eastern half of the United States. Even in those areas, temperatures are expected to rise beginning this weekend and into next week. Overall demand for the week is forecast to be in the “high” range, but declining to the “moderate” range beginning next week.

Total U.S. stockpiles fell week over week to 12.5% below last year’s level and are now also 12.3% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.584 trillion cubic feet, around 362 billion cubic feet below the five-year average of 2.946 trillion cubic feet and 368 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.952 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, traded down 0.5% to $87.51, in a 52-week range of $76.05 to $88.21.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 1.8%, at $4.02 in a 52-week range of $3.41 to $7.29.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.4% to $113.93. The 52-week range is $81.99 to $116.47.

Also, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 3.4%, at $24.72 in a 52-week range of $20.40 to $35.00.