Natural gas futures for April delivery traded down about 2.7% in advance of the EIA’s report, at around $2.84 per million BTUs, and tumbled further to around $2.80 (down almost 4% for the day) following release of the report. Natural gas futures have risen from around $2.71 per million BTUs in the past five trading days. The 52-week low for natural gas futures is $2.59. One year ago, the price for a million BTUs was around $4.40.
Analysts at Bank of America said earlier this week that natural gas production increases have been surprisingly strong, even as rig counts fall. The rise is attributed to technology improvements in gas extraction. The bank has established a target price of $2.25 per million BTUs for summer deliveries and warns that a cool summer could push prices even lower by reducing demand for air conditioning.
Demand for heating was low earlier this week as warmer weather covered most of the United States. The rest of the week is expected to see somewhat higher demand in the Northeast and in Texas, and the forecast for the first part of next week sees colder air spreading across more of the country. Demand, however, is expected to remain moderate.
Stockpiles are about 52.8% above their levels of a year ago and about 13.3% below the five-year average.
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The EIA reported that U.S. working stocks of natural gas totaled about 1.47 trillion cubic feet, around 225 billion cubic feet below the five-year average of 1.69 trillion cubic feet and 507 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 960 billion cubic feet for the same period a year ago.
Here is how stocks of the largest U.S. natural gas producers reacted to this report:
Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 1.1%, at $84.99 in a 52-week range of $82.68 to $104.76.
Chesapeake Energy Corp. (NYSE: CHK) traded down nearly 4%, at $13.57 in a 52-week range of $13.47 to $29.92.
EOG Resources Inc. (NYSE: EOG) traded down about 1.8% to $88.99. The 52-week range is $81.07 to $118.89.
In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 3.2%, at $14.20 in a 52-week range of $13.12 to $26.88.
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