Natural Gas Price Drops 4% on Low Storage Withdrawal

Natural gas futures for April delivery traded down about 1.6% in advance of the EIA’s report, at around $2.82 per million BTUs, and dropped to about $2.75 immediately following the report. Natural gas futures have slipped slightly from around $2.89 per million BTUs since last week. The 52-week low for natural gas futures is $2.57. One year ago the price for a million BTUs was around $4.00.

Demand for heating rose last week and continued into this week as cold temperatures settled in over the eastern United States. Colder temperatures continued to put a chill on the Southeast and Florida, while temperatures west of the Rockies remain above normal. The big change from earlier this year is the cold weather now covers the country from the Rockies east to the Atlantic coast.

Stockpiles are about 42.3% above their levels of a year ago and about 1.5% below the five-year average. Colder weather last week followed by more cold weather this week and forecasts for continued colder weather into next week have increased demand for natural gas, even though demand was slightly below expectations last week.

The EIA reported that U.S. working stocks of natural gas totaled 1.94 trillion cubic feet, about 30 billion cubic feet below the five-year average of 1.97 trillion cubic feet and 576 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.36 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 1.2%, at $88.53 in a 52-week range of $86.03 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 3.8%, at $17.30 in a 52-week range of $16.41 to $29.92.

EOG Resources Inc. (NYSE: EOG) traded down about 2.4% to $90.84. The 52-week range is $81.07 to $118.89.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 4.8%, at $13.81 in a 52-week range of $13.12 to $26.88.