Natural Gas Inventories Rise, Price Remains Flat (XOM, CHK, EOG, UNG, OIH)

The US Energy Information Administration today reported the US natural gas stocks rose by a total of 67 billion cubic feet, below the 73 billion cubic feet increase that analysts had expected. Natural gas prices are flat this morning, at $2.18/thousand cubic feet, about $0.13/thousand cubic feet lower than a week ago.

The EIA reported that US working stocks of natural gas totaled 2.94 trillion cubic feet, about 708 billion cubic feet higher than the five-year average of 2.28 trillion cubic feet. Working gas in storage totaled 2.24 trillion cubic feet for the same period a year ago.

US natural gas inventories are about 32% higher than they were a year ago and about 29% higher than the 5-year average. Both figures are lower than they were a week ago.

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, is up about 0.7% at $81.17 in a 52-week range of $67.03-$87.94. Cheseapeake Energy Corp. (NYSE: CHK) is up about 1.5% at $17.19 in a 52-week range of $13.32-$35.75. EOG Resources Inc. (NYSE: EOG) is also up about 1.5% at $94.13 in a 52-week range of $66.81-$119.97.

The US Natural Gas Fund (AMEX: UNG) is up about 6.4% at $16.22 in a 52-week range of $14.25-$46.52. The Market Vectors Oil Services ETF (AMEX: OIH) is up about 1.4% at $35.13 in a 52-week range of 33.57-$45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Rising share prices are probably indicating that investors are encouraged by declining production rates. Rig counts for natural gas drilling have also declined to the lowest level in more than a decade. As supply is decreased, demand should rise and prices should follow. The jury’s still out though, despite the encouraging signals.

Paul Ausick