Natural Gas Inventory Jumps Again (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 67 billion cubic feet, somewhat higher than the 64 billion cubic feet that analysts were expecting. Natural gas futures prices were about 3% lower in advance of the EIA’s report at around $2.80 per thousand cubic feet, and fell slightly more following the EIA report.

The EIA reported that U.S. working stocks of natural gas totaled 3.5 trillion cubic feet, about 278 billion cubic feet higher than the five-year average of 3.22 trillion cubic feet. Working gas in storage totaled 3.18 trillion cubic feet for the same period a year ago.

U.S. natural gas inventories are about 10% higher than they were a year ago and about 8.6% higher than the five-year average. Both figures continue to drop, but partly that is due to an increase in the overall U.S. storage capacity. The EIA reports that total U.S. natural gas storage capacity is 4.239 trillion cubic feet.

Natural gas futures prices are about 47% 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 five-year average, but the gap has been narrowed by about 50%. Natural gas storage facilities stand at about 83% of capacity, a level not normally reached until the end of September as injections ramp up in advance of expected winter heating demands.

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 up about 0.3% at $90.87 in a 52-week range of $67.93 to $92.50.

Chesapeake Energy Corp. (NYSE: CHK) is down about 2.2% at $19.25 in a 52-week range of $13.32 to $29.87.

EOG Resources Inc. (NYSE: EOG) is down about 0.6% at $112.91 in a 52-week range of $66.81 to $119.97.

The US Natural Gas Fund (NYSEMKT: UNG) is down about 0.2% at $19.05 in a 52-week range of $14.25 to $38.36. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is down about 0.8% at $41.63 in a 52-week range of $32.54 to $45.14. The first fund tracks spot prices; the second includes major drillers and services companies.

Paul Ausick