Natural Gas Price Dips as Permian Basin Prices Go Negative

Print Email

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 23 billion cubic feet for the week ending March 29.

Analysts were expecting a storage injection of around 18 billion cubic feet. The five-year average for the week is a withdrawal of 28 billion cubic feet, and last year’s withdrawal totaled 29 billion cubic feet. Natural gas inventories fell by 36 billion cubic feet in the week ending March 22.

Natural gas futures for May delivery traded down less than a penny in advance of the EIA’s report, at around $2.67 per million BTUs, and fell to around $2.64 shortly after the announcement.

For the period between April 4 and April 10, NatGasWeather.com expects “low” demand and offers the following outlook:

High pressure will cover much of the country through early next week with highs of 50s and 60s across the northern US, locally 70s. The southern US will be warm with highs of 70s and 80s, while slightly cooler exceptions will occur over the West and portions of the Tennessee Valley where weather systems will track through. Areas of showers and cooling will increase across the northern and central US mid and late next week as weather systems sweep through.

Total U.S. stockpiles increased week over week, rising to around 16.8% below last year’s level and to 30.9% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.130 trillion cubic feet at the end of last week, around 505 billion cubic feet below the five-year average of 1.635 trillion cubic feet and 228 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 1.358 trillion cubic feet for the same period a year ago.

On Wednesday, natural gas prices fell to an all-time low negative level of −$3.38 per million BTUs at the Waha Hub in the Texas panhandle. Gas producers have been paying customers to take gas since March 22, according to a report at Oilprice.com. The plunge was related to constrained pipeline capacity out of the Permian Basin and a glitch at a compression station on Kinder Morgan’s El Paso Natural Gas pipeline.

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

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.8%, at $81.55 in a 52-week range of $64.65 to $87.36.
  • Chesapeake Energy Corp. (NYSE: CHK) also traded up about 0.8% to $3.17, in a 52-week range of $1.71 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.4% to $93.54. The 52-week range is $82.04 to $133.53.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 1.1%, at $23.24 in a 52-week range of $21.78 to $39.87.


I'm interested in the Newsletter