Energy

Natural Gas Supply Higher Than Expected

Blue flames of a gas stove
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The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 87 billion cubic feet for the week ending October 18, compared with an expected build of about 78 billion to 82 billion cubic feet anticipated by analysts. Natural gas futures prices were trading about 1.2% lower in advance of the EIA’s report, at around $3.55 per million BTUs, and popped to around $3.59 immediately following the report.

The EIA indicated that U.S. working stocks of natural gas totaled 3.74 trillion cubic feet, about 77 billion cubic feet higher than the five-year average of 3.66 trillion cubic feet. Working gas in storage totaled 3.83 trillion cubic feet for the same period a year ago. Natural gas inventories remain roughly in the middle of the five-year range. The five-year average increase for the period is 68 billion cubic feet.

Even though the inventory build was larger than expected, prices bounced off daily lows to trade nearer Wednesday’s closing price of $3.62 per million BTUs. A cold snap is expected along the Rocky Mountain front, extending into the Midwest next week. That should boost demand for heating.

Here is how stocks of the largest U.S. natural gas producers are reacting to this report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was up 0.8%, at $88.31 in a 52-week range of $84.70 to $95.49.

Chesapeake Energy Corp. (NYSE: CHK) was up 1.8%, at $27.78 in a 52-week range of $16.23 to $28.71.

EOG Resources Inc. (NYSE: EOG) was up 0.7% to $179.61. The 52-week range is $110.91 to $188.30.

The U.S. Natural Gas Fund (NYSEMKT: UNG) was down 0.7%, at $18.38 in a 52-week range of $16.59 to $24.09. The Market Vectors Oil Services ETF (NYSEMKT: OIH) was down 0.8%, at $48.75 in 52-week range of $36.24 to $50.61. The first fund tracks spot prices; the second includes major drillers and services companies.

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