Energy Economy

Natural Gas Price Holds Following Expected Inventory Withdrawal

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles decreased by 149 billion cubic feet for the week ending March 1.

Analysts polled by Reuters were expecting a storage withdrawal of around 140 billion cubic feet. The five-year average for the week is a withdrawal of 109 billion cubic feet, and last year’s withdrawal totaled 57 billion cubic feet. Natural gas inventories fell by 166 billion cubic feet in the week ending February 22.

Natural gas futures for April delivery traded up about a penny in advance of the EIA’s report, at around $2.86 per million BTUs, and traded at $2.85 shortly after the announcement.

For the period between March 7 and March 13, expects “high” demand and offers the following outlook:

Frigid cold continues across much of the central, northern and eastern US with lows again into the -10s to 20s, but with temperatures now moderating to close the week. The southern US continues to rapidly warm with highs the next several days being spring-like and in the 60s to 80s. The West remains cool and unsettled as weather systems bring rain and snow. After a mild break across the Great Lakes and Northeast this weekend, a new cold shot will sweep through early next week followed by rapid warming mid-week.

Total U.S. stockpiles decreased week over week, falling to around 14.9% below last year’s level and to 25% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.390 trillion cubic feet at the end of last week, around 464 billion cubic feet below the five-year average of 1.854 trillion cubic feet and 243 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 1.633 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 0.5%, at $79.67 in a 52-week range of $64.65 to $87.36.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.2%, at $2.98 in a 52-week range of $1.71 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.6% to $91.35. The 52-week range is $82.04 to $133.53.

Furthermore, the United States Natural Gas ETF (NYSEARCA: UNG) traded flat at $25.10, in a 52-week range of $21.65 to $39.87.

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