Natural Gas Price Steady as Inventory Jumps

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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 86 billion cubic feet for the week ending September 14.

Analysts were expecting a storage injection of around 86 billion cubic feet. The five-year average for the week is an injection of 76 billion cubic feet, and last year’s storage increase for the week totaled 96 billion cubic feet. Natural gas inventories rose by 63 billion cubic feet in the week ending September 7.

Natural gas futures for October delivery traded down about a penny in advance of the EIA’s report, at around $2.90 per million BTUs, and remained virtually unchanged shortly after the report was released.

For the period between September 20 and September 26, predicts “moderate” demand and offers the following outlook:

High pressure will dominate much of the US today and Friday with highs of 80s and 90s over the southern US and 70s and 80s over the northern US. Cooler exceptions will be across the Northwest & N. Plains where a weather system is tracking through. Weak weather systems will impact the far northern US this weekend, while remaining warmer than normal over the rest of the country, but not quite as hot as currently across the southern US. High pressure will strengthen across the southeastern US next week, but w/stronger cool shots N. Plains.

Demand for natural gas rose this summer as demand for air-conditioning increased by 13% year over year and more natural gas-powered electricity generation came online. As a result, inventories are low going into the winter heating season but any effect on pricing may be offset by skyrocketing production. Reuters analyst John Kemp noted Wednesday that natural gas production rose by more than 1.4 trillion cubic feet in the first half of this year. Plentiful production is one reason that inventories lag so far behind prior year and five-year average levels. Higher production has kept prices low and should continue to keep them low well into the future.

Total U.S. stockpiles dipped week over week to 19.8% below last year’s level and fell to 17.7% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.722 trillion cubic feet at the end of last week, around 586 billion below the five-year average of 3.3.8 trillion cubic feet and 672 billion below last year’s total for the same period. Working gas in storage totaled 3.394 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 the latest report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down less than 0.1% to $84.62, in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.6%, at $4.37 in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded down about 0.5% to $119.63. The 52-week range is $93.14 to $131.60.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 0.8%, at $23.96 in a 52-week range of $20.40 to $27.43.

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