Natural Gas Price Tumbles on Huge Storage Increase

Natural gas futures for July delivery traded down about 0.8% in advance of the EIA’s report, at around $2.60 per million BTUs, and slipped further to around $2.55 (down about 3% for the day) following release of the report. Last Thursday, natural gas closed at $2.71 per million BTUs, and natural gas futures peaked at around $2.71 earlier this week. The 52-week low for natural gas futures is $2.54. One year ago, the price for a million BTUs was around $4.20.

The sharper than expected increase to storage will weigh on natural gas prices, especially because the production outlook calls for more increases. And earlier Thursday, the International Energy Agency released its annual medium-term report on natural gas, which shows demand growth slowing compared with last year’s estimate. That will have little further impact on the day’s sliding natural gas prices.

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Temperatures are generally on the rise across the country this week, and the trend is expected to continue into next week. Demand for cooling along the southern tier of states from Texas to Florida could be moderate to strong, as temperatures could rise to triple digits. The northern tier likely will be warmer with another weather system from Canada due next week to cool things off a bit.

Stockpiles are about 51% above their levels of a year ago and about 1% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.233 trillion cubic feet, around 22 billion cubic feet above the five-year average of 2.211 trillion cubic feet and 751 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.482 trillion cubic feet for the same period a year ago.

Here is how stocks of the largest U.S. natural gas producers reacted to this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.8%, at $84.29 in a 52-week range of $82.68 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 4% to $13.01, in the 52-week range of $12.98 to $29.92. The low was set Thursday.

EOG Resources Inc. (NYSE: EOG) traded down about 0.9% to $88.20. The 52-week range is $81.07 to $118.89.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.8%, at $12.56 in a 52-week range of $12.28 to $26.42.

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