Natural Gas Price Dips Following Substantial Inventory Report

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 65 billion cubic feet for the week ending November 2.

Analysts were expecting a storage injection of around 53 billion to 65 billion cubic feet. The five-year average for the week is an injection of 48 billion cubic feet, and last year’s storage increase for the week totaled 22 billion cubic feet. Natural gas inventories rose by 48 billion cubic feet in the week ending October 26.

Natural gas futures for December delivery traded down about a penny in advance of the EIA’s report, at around $3.54 per million BTUs, and slipped to $3.52 after the report was released.

Natural gas prices surged to 12-month highs earlier this week on a forecast for colder weather. For the period between November 8 and November 15, NatGasWeather.com predicts “high” demand and offers the following outlook:

Cold air will pour down the Plains today, while also spreading across the Great Lakes and east-central US. Lows behind the cold front will reach the teens to 30s, locally single digits. The East will be mostly mild again today with highs of 50s to 70s, locally 80s, but will cool this weekend into the 30s and 40s. The southern US will be mostly mild to warm with highs of 60s to 80s, although with areas of showers as a cool front stalls just north. California/SW will be mostly mild to warm with highs of 60s to 80s, while colder over the interior West.

Total U.S. stockpiles increased slightly week over week to 15.3% below last year’s level and also dipped slightly to 16.2% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.208 trillion cubic feet at the end of last week, around 621 billion cubic feet below the five-year average of 3.829 trillion cubic feet and 580 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.788 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 0.3%, at $82.81 in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.3%, at $3.63 in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down about 2% to $106.98. The 52-week range is $96.54 to $133.53.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 0.2%, at $28.61 in a 52-week range of $20.40 to $29.11.