Natural Gas Price Rises but So Does Storage Level

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 48 billion cubic feet for the week ending February 26. Analysts were expecting a storage withdrawal of around 33 billion to 47 billion cubic feet. The five-year average for the week is a withdrawal of around 137 billion cubic feet, and last year’s withdrawal for the week totaled 227 billion cubic feet. The withdrawal from storage totaled 117 billion cubic feet in the previous week.

Natural gas futures for April delivery traded down about 2.4% in advance of the EIA’s report, at around $1.64 per million BTUs, and traded around $1.67 after the data release. Last Thursday natural gas closed at $1.79 per million BTUs, the high for the past five trading days. The 52-week range for natural gas is $1.63 to $3.19, and the low was posted early Thursday. One year ago, the price for a million BTUs was around $3.10.

Warmer temperatures in the Northeast and Midwest last week cut demand for natural gas sharply. Cooler temperatures late this week will give way to rising temperatures again next week. The official storage injection season begins in April, so there is not much time left for natural gas inventories to fall. That could spell continued low prices throughout the summer and into the next heating season beginning in October.

Stockpiles are about 46% above their levels of a year ago and about 36% above the five-year average.
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The EIA reported that U.S. working stocks of natural gas totaled about 2.536 trillion cubic feet, around 666 billion cubic feet above the five-year average of 1.870 trillion cubic feet and 794 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.742 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 this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.8%, at $82.50 in a 52-week range of $66.55 to $90.09.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 14.4% to $3.89. The stock’s 52-week range is $1.50 to $16.98. Co-founder and former Chesapeake CEO Aubrey McClendon was killed on Wednesday in a traffic accident in Oklahoma City. To say that McClendon changed the natural gas business in the United States does not begin to tell his story. Our condolences to his family.

EOG Resources Inc. (NYSE: EOG) traded up about 1.6% to $68.03. The 52-week range is $57.15 to $101.36.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.6%, at $5.88 in a 52-week range of $5.80 to $15.28. The low was posted Thursday morning.