Natural Gas Price Firmly Higher Following Inventory Report

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The U.S. Energy Information Administration (EIA) reported Friday morning that U.S. natural gas stockpiles decreased by 63 billion cubic feet for the week ending November 30.

Analysts were expecting a storage withdrawal of between 51 and 77 billion cubic feet. The five-year average for the week is a withdrawal of 58 billion cubic feet, and last year’s withdrawal totaled 3 billion cubic feet. Natural gas inventories fell by 59 billion cubic feet in the week ending November 23.

Natural gas futures for January delivery traded up about 13 cents in advance of the EIA’s report, at around $4.46 per million BTUs, and rose further to around $4.48 after the report was released.

For the period between December 7 and December 13, NatGasWeather.com predicts “high” demand and offers the following outlook:

Reinforcing cold air will sweep across the northern US and into the East the next few days where lows will reach the 0s to 20s across the North, with upper 20s to near 40°F over the South and Southeast. Cold air will cover much of the country this weekend, coldest over the Northeast, with strong national demand aided by a weather system tracking across Texas and the southern US with mostly rain, but locally as snow/ice. The West will see a mix of cold and mild. Next week, mild high pressure will gain across the northern and central US.

Over the longer term, Natural Gas Intelligence cites NatGasWeather’s outlook for cooler weather possibly returning after December 20, with cold weather returning around the beginning of the new year.

Total U.S. stockpiles decreased week over week from 17.6% to 19.1% below last year’s level and also fell from 19.1% to 19.5% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.991 trillion cubic feet at the end of last week, around 725 billion cubic feet below the five-year average of 3.716 trillion cubic feet and 704 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.695 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 today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.3% to $78.63, in a 52-week range of $72.16 to $89.30.
  • Chesapeake Energy Corp. (NYSE: CHK) traded up about 2.5%, at $2.79 in a 52-week range of $2.53 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded up about 3.6% to $105.85. The 52-week range is $96.54 to $133.53.

Furthermore, the United States Natural Gas ETF (NYSEARCA: UNG) traded up about 2.4%, at $36.20 in a 52-week range of $20.40 to $39.87.