Natural Gas Price Dips Following Small Inventory Draw

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The U.S. Energy Information Administration (EIA) reported Friday morning that U.S. natural gas stockpiles decreased by 20 billion cubic feet for the week ending December 28.

Analysts were expecting a storage withdrawal in a range of 31 billion to 75 billion cubic feet. The five-year average for the week is a withdrawal of 121 billion cubic feet, and last year’s withdrawal totaled 122 billion cubic feet. Natural gas inventories fell by 48 billion cubic feet in the week ending December 21.

Natural gas futures for February delivery traded up about eight cents in advance of the EIA’s report, at around $2.98 per million BTUs, and slipped to around $2.95 after the report was released.

For the period between January 3 and January 10, NatGasWeather.com expects “low to very low” demand and offers the following outlook:

A weather system will track across the Southeast the next few days with areas of rain. The rest of the country will warm into the weekend with highs of 40s and 50s gaining ground across the northern US and 60s and 70s across the southern US. Weather systems will track into the West Coast the next several days with rain, snow, and cooler conditions. The East will become warmer than normal apart from a quick cold shot across New England late Sunday. Next week will be mild over most of the country with light demand until late in the week.

Total U.S. stockpiles increased week over week from about 20% to 14.3% below last year’s level and also rose from about 21% to 17.2% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.705 trillion cubic feet at the end of last week, around 560 billion cubic feet below the five-year average of 3.265 trillion cubic feet and 450 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.155 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 2.5%, at $70.34 in a 52-week range of $64.65 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 9.2%, at $2.33 in a 52-week range of $1.71 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded up about 3.3% to $92.93. The 52-week range is $82.04 to $133.53.

Furthermore, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 1.3% to $24.53, in a 52-week range of $21.56 to $39.87.