Energy Economy

Natural Gas Price Slides on Larger-Than-Expected Storage Increase

Paul Ausick

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 91 billion cubic feet for the week ending June 15.

Analysts were expecting a storage injection of around 85 billion cubic feet. The five-year average for the week is an injection of 83 billion cubic feet, and last year’s storage increase for the week totaled 63 billion cubic feet. Natural gas inventories rose by 96 billion cubic feet in the week ending June 1.

Natural gas futures for July delivery traded up about 1.5% in advance of the EIA’s report, at around $3.00 per million BTUs. and slipped to just around $2.97 shortly after the report was released.

For the period between June 21 and June 27, predicts “moderate” demand and offers the following demand outlook:

A weather system will track across the central US the next few [days] with showers and thunderstorms but also with comfortable highs of 70s and 80s. The northern US will also be mostly comfortable through the weekend with highs of 70s to lower 80s for light demand. The southern and western US will be hot with mid-80s to 100s, hottest over California, Southwest, and Southeast. Much of the US will warm into the mid-80s to 100s next week as high pressure strengthens with the exception being the north-central US due to a weather system. Overall demand will be MODERATE increasing to HIGH.

Total U.S. stockpiles of natural gas rose week over week to 27.4% below last year’s level and are now 19.9% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.004 trillion cubic feet at the end of last week, around 499 billion cubic feet below the five-year average of 2.503 trillion cubic feet and 757 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.761 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 the latest report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.5%, at $80.10 in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.6% to $4.96, in a 52-week range of $2.53 to $5.20.
  • EOG Resources Inc. (NYSE: EOG) traded down about 2.2% to $116.85. The 52-week range is $81.99 to $128.03.

Also, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 0.2%, at $24.06 in a 52-week range of $24.05 to $27.92.