Natural Gas Producers Can’t Slow Down Fast Enough (XOM, CHK, EOG, UNG, OIH)

The U.S. Energy Information Administration (EIA) today reported the U.S. natural gas stocks rose by a total of 66 billion cubic feet, higher than the 61 billion cubic feet that analysts were expecting. Natural gas futures prices were higher in advance of the EIA’s report at around $2.69 per thousand cubic feet, and dropped sharply following the EIA report. Prices have recovered to around $2.75 per thousand cubic feet.

The EIA reported that U.S. working stocks of natural gas totaled 3.37 trillion cubic feet, about 361 billion cubic feet higher than the five-year average of 3.01 trillion cubic feet. Working gas in storage totaled 2.95 trillion cubic feet for the same period a year ago.

U.S. natural gas inventories are about 15% higher than they were a year ago and about 12% higher than the 5-year average. Both figures are roughly equal to their levels of a week ago. Gas in storage remains at record highs for this time of year.

Natural gas futures prices are about 45% higher than they were at their low point of $1.90 per thousand cubic feet in April of this year. Working gas in storage remains above the high end of the 5-year average, but the gap is narrowing.

Here’s how stocks of the largest U.S. natural gas producers are reacting to today’s report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, is down about 0.7% at $87.31 in a 52-week range of $67.93-$88.91.

Chesapeake Energy Corp. (NYSE: CHK) is down about 2% at $19.13 in a 52-week range of $13.32-$33.87.

EOG Resources Inc. (NYSE: EOG) is down about 1.9% at $105.96 in a 52-week range of $66.81-$119.97.

The US Natural Gas Fund (NYSEMKT: UNG) is up about 1.9% at $18.42 in a 52-week range of $14.25-$41.60. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down about 1.9% at $39.57 in a 52-week range of $32.54-$45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Paul Ausick