The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 69 billion cubic feet for the week ending June 10. Analysts were expecting a storage addition of around 66 billion cubic feet. The five-year average for the week is an injection of around 88 billion cubic feet, and last year’s storage addition for the week totaled 77 billion cubic feet. Natural gas inventories rose by 65 billion cubic feet in the week ending June 3.
Natural gas futures for July delivery traded flat in advance of the EIA’s report, at $2.60 per million BTUs, and traded near $2.58 after the data release. Last Thursday natural gas closed at $2.62 per million BTUs. The highest closing price for the past five trading days came Tuesday at $2.60 per million BTUs, after the contract had touched $2.64 on Monday. The 52-week range for natural gas is $1.94 to $3.17. One year ago the price for a million BTUs was around $3.12.
The weather forecast through June 22 calls for rising temperatures across most of the country, raising demand for electricity to power air-conditioning. Demand for natural gas is expected to remain in the moderate range through next week. Natural gas currently generates about a third of U.S. electricity.
Natural gas prices have remained near $2.60 per million BTUs for a week now, well above their lows below $2 earlier this year. The price increases are primarily due to lower production, some of which is going into storage for the coming winter and some of which is being used to generate electricity now as the summer begins.
The bad news for producers is that if natural gas prices rise too much, many utilities will fire up their currently idled coal-fired units, cutting into demand for natural gas. Coal prices in Wyoming have already dropped to around $2.10 per million BTUs, according to a report in the Casper Star-Tribune.
Stockpiles are about 26% above their levels of a year ago and 30% above the five-year average.
The EIA reported that U.S. working stocks of natural gas totaled about 3.041 trillion cubic feet, around 704 billion cubic feet above the five-year average of 2.337 trillion cubic feet and 633 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.408 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 the latest report:
Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.8%, at $89.43 in a 52-week range of $66.55 to $91.43.
Chesapeake Energy Corp. (NYSE: CHK) traded down about 5.23% to $4.06. The stock’s 52-week range is $1.50 to $12.23.
EOG Resources Inc. (NYSE: EOG) traded down about 3.74% to $79.36. The 52-week range is $57.15 to $90.13.
Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.8%, at $7.76 in a 52-week range of $5.78 to $14.17.
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