The U.S. Energy Information Administration (EIA) today reported the U.S. natural gas stocks declined by a total of 18 billion cubic feet, more than the 14 billion cubic feet decline that analysts were expecting. Natural gas futures prices were less than 1% higher in advance of the EIA’s report at around $3.78 per thousand cubic feet, and rose to around $3.80 immediately following the EIA report.

The EIA reported that U.S. working stocks of natural gas totaled 3.91 trillion cubic feet, about 209 billion cubic feet higher than the five-year average of 3.7 trillion cubic feet. Working gas in storage totaled 3.84 trillion cubic feet for the same period a year ago.

This week’s report confirms the first drawdown on the nation’s natural gas stocks for the winter heating season. We are likely to see drawdowns continue until the weather warms up again. Inventories were near record highs, so the overall impact on prices should not be severe.

Natural gas futures prices have about doubled from their low point of $1.90 per thousand cubic feet in April of this year. Working gas in storage remains above the high end of the 5-year average.

Here’s how stocks of the largest U.S. natural gas producers are reacting to today’s report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, is up about 0.5% at $86.46 in a 52-week range of $73.90 to $93.67.

Chesapeake Energy Corp. (NYSE: CHK) is down about 0.1% at $16.83 in a 52-week range of $13.32 to $26.16.

EOG Resources Inc. (NYSE: EOG) is up about 1.1% at $114.58 in a 52-week range of $82.48 to $124.49.

The US Natural Gas Fund (NYSEMKT: UNG) is down about 0.9% at $21.87 in a 52-week range of $14.25 to $32.48. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is up about 1.3% at $37.07 in a 52-week range of $32.54 to $45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Paul Ausick

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