Natural Gas Price Skips Higher on Huge Inventory Drawdown

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The U.S. Energy Information Administration (EIA) reported Wednesday morning that U.S. natural gas stockpiles decreased by 134 billion cubic feet for the week ending November 16.

Analysts were expecting a storage withdrawal of between 92 and 121 billion cubic feet. The five-year average for the week is a withdrawal of 25 billion cubic feet and last year’s withdrawal totaled 42 billion cubic feet. Natural gas inventories rose by 39 billion cubic feet in the week ending November 9.

Natural gas futures for December delivery traded up about 4 cents in advance of the EIA’s report, at around $4.56 per million BTUs and jumped to $4.70 after the report was released.

For the period between November 21 and November 27, NatGasWeather.com predicts “high to very high” demand and offers the following outlook:

Cold air continues impacting the central, northern, and eastern US with snow showers, especially downwind of the Great Lakes as a reinforcing cold shot arrives. This will continue to result in strong demand as lows reach the single digits to. A milder break will set up across much of the country Sat-Sun before the next weather systems develops over the west-central US this weekend, then advancing eastward. Much needed showers will push into California the next few days with cooler conditions, while the rest of the West will see a mix of mild and cool periods.

Total U.S. stockpiles decreased week over week from 14% to 16.6% below last year’s level and also fell from 14% to 18.6% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.113 trillion cubic feet at the end of last week, around 710 billion cubic feet below the five-year average of 3.823 trillion cubic feet and 620 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.733 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers are reacting to today’s report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 1.8% at $78.34 in a 52-week range of $72.16 to $89.30.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 4.4% at $3.34 in a 52-week range of $2.53 to $5.60.

EOG Resources Inc. (NYSE: EOG) traded up about 4.6% at $107.09. The 52-week range is $96.54 to $133.53.

The United States Natural Gas ETF (NYSEArca: UNG) traded up about 3.1% at $37.86 in a 52-week range of $20.40 to $39.87.