Natural Gas Price Jumps on Inventory Report

Natural gas futures prices traded down fractionally in advance of the EIA’s report, at around $4.35 per million BTUs, and jumped about 2.4% to around $4.50 immediately following the report.

The jump in price after the EIA report is due to the relatively small build in inventories. In order for U.S. stockpiles to be topped up by November and the start of the heating season, the quantities going into to storage will have to rise. Stockpiles are 40% below their level a year ago and 45% below the five-year average.

The Midwest could see cooler temperatures next week and the cooling season has already begun in California, where hot temperatures have hit the southern part of the state. Overall demand for natural gas is expected to be moderate for the week.

The EIA reported that U.S. working stocks of natural gas totaled 1.16 trillion cubic feet, about 959 billion cubic feet below the five-year average of 2.12 trillion cubic feet. Working gas in storage totaled 1.95 trillion cubic feet for the same period a year ago. Natural gas inventories are rising again but remain well below the bottom of the five-year range.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was down about 1% to $101.26, in a 52-week range of $84.79 to $103.45.

Chesapeake Energy Corp. (NYSE: CHK) was down about 1.2%, at $28.87 in a 52-week range of $19.32 to $30.48.

EOG Resources Inc. (NYSE: EOG) was down 1.5%, at $102.30. The 52-week range is $62.27 to $106.50.

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