Natural Gas Price Tumbles on Big Inventory Build

Energy

Published: September 4, 2014 11:05 am

Last Updated: April 28, 2020 2:24 am

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 79 billion cubic feet for the week ending August 29. That compared with an expected increase of 73 billion cubic feet anticipated by analysts. The five-year average gain for the week is 55 billion cubic feet.

Natural gas futures were trading up about 0.7% in advance of the EIA’s report, at around $3.87 per million BTUs, and tumbled to $3.80 immediately following the EIA report. Natural gas futures have risen by about $0.30 per million BTUs since last week.

Stockpiles are about 14.8% below their levels of a year ago and about 15.4% below the five-year average. The rise in U.S. stockpiles is still on course for an April through October injection record, even though the start of the heating season is likely to see U.S. stockpiles at around 3.5 trillion cubic feet, the lowest level since 2008.

Natural gas production in June reached 87.08 billion cubic feet per day in the United States, up about 0.5% from May production and a whopping 6.9% higher than June 2013 production. Given the low starting point of the nation’s natural gas inventory at the end of this past winter, the higher production has been closing the inventory gap that existed in the spring. This is good news for consumers, but not so good news for producers. On top of that, cooler weather is cutting demand for air conditioning, another drag on natural gas prices.

The EIA reported that U.S. working stocks of natural gas totaled 2.71 trillion cubic feet, about 495 billion cubic feet below the five-year average of 3.2 trillion cubic feet. Working gas in storage totaled 3.18 trillion cubic feet for the same period a year ago. Natural gas inventories continue to rise, but remain well below the bottom of the five-year range.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, was up about 0.1% to $99.24, in a 52-week range of $84.79 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) was up about 0.6%, at $26.65 in a 52-week range of $22.63 to $29.92.

EOG Resources Inc. (NYSE: EOG) was down about 0.4% to $107.35. The 52-week range is $78.01 to $118.89.

The United States Natural Gas ETF (NYSEMKT: UNG) was down about 1.5%, at $20.71 in a 52-week range of $16.59 to $27.89.

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