Natural Gas Demand to Stay High on Cold Weather Forecast

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 86 billion cubic feet for the week ending March 16.

Analysts were expecting a storage withdrawal between 86 billion and 96 billion cubic feet. The five-year average for the week is a withdrawal of 53 billion cubic feet, and last year’s storage decrease for the week totaled 150 billion cubic feet. Natural gas inventories fell by 93 billion cubic feet in the week ending March 9.

Natural gas futures for April delivery traded up about 0.8% in advance of the EIA’s report, at around $2.65 per million BTUs, and rose less than a penny shortly after the report was released.

The forecast for overall natural gas demand next week will fall into the “high” range as cooler weather lingers in the heavily populated East through the weekend, followed by milder temperatures next week. Weather in the West is expected to stormy with rain and snow predicted.

Total U.S. stockpiles fell week over week to 31.6% below last year’s level and are now 18.5% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.446 trillion cubic feet at the end of last week, around 329 billion cubic feet below the five-year average of 1.775 trillion cubic feet and 667 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.113 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 down about 0.8% to $74.46, in a 52-week range of $73.53 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.5%, at $3.15 in a 52-week range of $2.53 to $6.59.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.6% to $104.20. The 52-week range is $81.99 to $119.00.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 0.1% at $22.08 in a 52-week range of $20.40 to $31.72.

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