Natural Gas Price Pops on Larger-Than-Expected Inventory Drop

Energy

Published: January 12, 2017 11:45 am

Last Updated: January 12, 2020 3:55 pm

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 151 billion cubic feet for the week ending January 6. Analysts were expecting a storage decline of around 144 billion cubic feet. The five-year average for the week is a withdrawal of around 167 billion cubic feet, and last year’s storage decline for the week totaled 168 billion cubic feet. Natural gas inventories fell by just 49 billion cubic feet in the week ending December 30.

Natural gas futures for February delivery traded up by about 3.8% in advance of the EIA’s report, at around $3.35 per million BTUs, and traded around $3.45 immediately after the data release. Natural gas closed at $3.22 per million BTUs on Wednesday, after falling from a high of $3.36 last Friday. The 52-week range for natural gas is $2.49 to $3.90. One year ago the price for a million BTUs was around $2.81.

Natural gas prices remained low over the past week as warmer weather moved through the middle of the country toward the east coast. Cold weather over the northern tier boosted consumption above the consensus estimate, but still below the five-year average and last year’s consumption. Continued warmer weather east of the Mississippi should keep prices in check again during the next week.

Stockpiles have now dropped to 10.3% below their levels of a year ago, and just 0.1% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.160 trillion cubic feet, around 4 billion cubic feet below the five-year average of 3.164 trillion cubic feet and 363 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.523 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers reacted this report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.5%, at $86.34 in a 52-week range of $71.55 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.2% to $6.91. The stock’s 52-week range is $1.50 to $8.20.

EOG Resources Inc. (NYSE: EOG) traded up about 1.1% at $105.85. The 52-week range is $57.15 to $109.37.

Also, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 4.2% at $8.53 in a 52-week range of $5.78 to $9.74.

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