Natural Gas Price Stays Flat on In-Line Drawdown

Natural gas futures for April delivery traded up about 1.1% in advance of the EIA’s report, at around $2.80 per million BTUs, and remained mostly flat immediately following the report. Natural gas futures have risen from around $2.72 per million BTUs since last week. The 52-week low for natural gas futures is $2.59. One year ago, the price for a million BTUs was around $4.00.

Demand for heating rose again last week and continued into this week as cold temperatures remained over the eastern and midwestern United States. Temperatures are recovering to more normal levels in the Southeast, and temperatures west of the Rockies remain above normal. Warmer temperatures are expected through the first half of next week, before another blast of cold air blows in from the north. As a result, heating demand is expected to be a bit above average next week.

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Natural gas 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 1.71 trillion cubic feet, about 143 billion cubic feet below the five-year average of 1.85 trillion cubic feet and 492 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.22 trillion cubic feet for the same period a year ago.

Earlier this week, research firm Bentek Energy reported that natural gas production in the Williston Basin remains very strong despite a decline in drilling rigs from about 162 in late December to 134 at the end of February:

Bentek’s sample production averaged nearly 1.1[billion cubic feet per day] over the past 30 days, in line with December’s record average and nearly twice as high as the previous five-year average during the same time period, signifying record levels for the Basin.

Continued record-level production acts to keep a lid on prices.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.2%, at $87.05 in a 52-week range of $86.03 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) traded up about 0.5%, at $15.54 in a 52-week range of $15.071 to $29.92. The low was posted today.

EOG Resources Inc. (NYSE: EOG) traded down about 0.1% to $90.39. The 52-week range is $81.07 to $118.89.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.2%, at $14.08 in a 52-week range of $13.12 to $26.88.