Natural Gas Price Dips Following Storage Report

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles decreased by 77 billion cubic feet for the week ending December 7.

Analysts were expecting a storage withdrawal in a range of 72 billion to 95 billion cubic feet. The five-year average for the week is a withdrawal of 79 billion cubic feet, and last year’s withdrawal totaled 59 billion cubic feet. Natural gas inventories fell by 63 billion cubic feet in the week ending November 30.

Natural gas futures for January delivery traded up about 14 cents in advance of the EIA’s report, at around $4.28 per million BTUs, and it dipped to around $4.26 after the report was released.

Natural Gas Intelligence director of strategy and research Patrick Rau does not expect gas prices to fall much lower before a dead-of-winter rebound: “This could be as low as we get without giving up on winter.”

For the period between December 13 and December 19, NatGasWeather.com predicts “moderate” demand and offers the following outlook:

A strong weather system will sweep across Texas and the South today into Friday with areas of rain, locally as snow, then across the Southeast Friday and Saturday. The rest of the country from Fri into early next week will be mostly mild with highs of 40s and 50s across the northern tier and 60s, to locally 70s elsewhere. A fast moving weather system will race across the Northeast early next week with colder temperatures but remaining mild over the rest of the country.

Total U.S. stockpiles decreased week over week from 19.1% to 19.9% below last year’s level and also fell from 19.1% to 19.9% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.914 trillion cubic feet at the end of last week, around 723 billion cubic feet below the five-year average of 3.637 trillion, as well as 722 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.636 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 up about 1.2% to $76.94, in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.2%, at $2.57 in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down less than 0.1%, at $103.90. The 52-week range is $96.54 to $133.53.

Moreover, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 3.4%, at $34.36 in a 52-week range of $20.40 to $39.87.

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