Natural Gas Price Tumbles on Smallish Inventory Drawdown

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 99 billion cubic feet for the week ending January 26.

Analysts were expecting a storage withdrawal of around 104 billion cubic feet. The five-year average for the week is a withdrawal of 160 billion cubic feet, and last year’s storage withdrawal for the week totaled 87 billion cubic feet. Natural gas inventories fell by 288 billion cubic feet in the week ending January 19.

Natural gas futures for March delivery traded down about 3.3% in advance of the EIA’s report, at around $2.89 per million BTUs, and slipped further to around $2.84 shortly after the report was released.

Overall demand for natural gas is forecast to be “high” for the coming week as a blast of Arctic air drives across the eastern states, bringing along low temperatures that could reach 10 degrees below zero Fahrenheit for the Midwest and Northeast. The weekend should see some relief from the cold, but it will return early next week. Temperatures in the west are expected to be mostly mild for this time of year.

Total U.S. stockpiles fell week over week to 19.3% below last year’s level, and are now also 16.2% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.197 trillion cubic feet, around 425 billion cubic feet below the five-year average of 2.622 trillion cubic feet and 526 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.723 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 up about 1.4%, at $88.48 in a 52-week range of $76.05 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.3% to $3.42, in a 52-week range of $3.30 to $6.65. The low was posted this morning.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.7% to $115.75. The 52-week range is $81.99 to $119.00.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 3.8%, at $24.12 in a 52-week range of $20.40 to $32.12.