Natural Gas Price Slumps Following Big Storage Addition

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 98 billion cubic feet for the week ending September 28.

Analysts were expecting a storage injection of around 90 billion cubic feet. The five-year average for the week is an injection of 84 billion cubic feet, and last year’s storage increase for the week totaled 44 billion cubic feet. Natural gas inventories rose by 46 billion cubic feet in the week ending September 21.

Natural gas futures for November delivery traded down about six cents in advance of the EIA’s report, at around $3.19 per million BTUs, and fell further to nearly $3.14 after the report was released. Natural gas hit a year-to-date high of around $3.26 earlier this week.

For the period between October 4 and October 10, NatGasWeather.com predicts “moderate” demand and offers the following outlook:

The West will see weather systems bring showers with cooling conditions, including showers across California. The southern US up the Mid-Atlantic Coast will remain very warm with highs of 80s to lower 90s. The Great Lakes and Northeast will be mostly mild to warm with highs of 60s to lower 80s due to strong high pressure, although with cooler exceptions near the Canadian border as weather systems provide glancing blows.

Total U.S. stockpiles increased slightly week over week to 18.2% below last year’s level and also rose slightly to 17.5% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.866 trillion cubic feet at the end of last week, around 607 billion cubic feet below the five-year average of 3.473 trillion cubic feet and 636 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.502 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 0.2%, at $85.99 in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.7%, at $4.70 in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.3% to $129.99. The 52-week range is $95.36 to $131.60.

Meanwhile, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 2%, at $26.32 in a 52-week range of $20.40 to $27.43.