Energy Economy

Natural Gas Price Ticks Higher on Weather Outlook, Minimal Storage Growth

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 25 billion cubic feet for the week ending March 29.

Analysts were expecting a storage injection of around 30 billion cubic feet. The five-year average for the week is an injection of 5 billion cubic feet, but last year’s withdrawal totaled 20 billion cubic feet. Natural gas inventories rose by 23 billion cubic feet in the week ending March 29. The EIA reclassified certain working stocks of natural gas to base stocks last week. The storage build would have been 29 billion cubic feet without the reclassifications.

Natural gas futures for May delivery traded down about two cents in advance of the EIA’s report, at around $2.68 per million BTUs, and rose to around $2.70 shortly after the announcement.

For the period between April 11 and April 17, expects “moderate” demand and offers the following outlook:

A strong spring storm with heavy rain and snow will track across the Midwest today with chilly conditions behind the cold front where lows will drop into the 20s and 30s. The southern US will be very warm to locally hot with highs of 70s to 90s, while mild over the West Coast with mostly 50s to 70s, coolest over the wetter Northwest. Another cool shot will sweep across the northern and central US Sat-Tue with lows of 20s and 30s for stronger national demand, then warming late next week.

Total U.S. stockpiles increased week over week, rising to around 13.7% below last year’s level and to 29.6% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.155 trillion cubic feet at the end of last week, around 485 billion cubic feet below the five-year average of 1.640 trillion cubic feet and 183 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 1.338 trillion cubic feet for the same period a year ago.

According to the EIA, natural gas-fired combined-cycle (NGCC) electricity generation capacity surpassed coal-fired capacity last year. As of January, U.S. gas-fired capacity totals 264 gigawatts compared to 243 gigawatts for coal-fired generation. Total natural gas-fired capacity surpassed coal-fired capacity more than 15 years ago, but 2018 marks the first time that NGCC capacity alone has surpassed coal-fired capacity. More efficient NGCC capacity now accounts for about half of total U.S. natural gas-fired capacity.

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 0.5%, at $81.98 in a 52-week range of $64.65 to $87.36.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.3% to $3.39, in a 52-week range of $1.71 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.8% to $99.48. The 52-week range is $82.04 to $133.53.

Furthermore, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 0.3%, at $23.68 in a 52-week range of $21.91 to $39.87.

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