Natural Gas Price and Inventory Fall as Demand Increases for Cooling

Natural gas futures for August delivery traded up about 2% in advance of the EIA’s report, at around $2.84 per million BTUs, and ticked down to $2.82 following release of the report. Last Thursday, natural gas closed at $2.81 per million BTUs, and natural gas futures peaked at just over $2.85 in the past five days. The 52-week low for natural gas futures is $2.57. One year ago, the price for a million BTUs was around $4.20.

Natural gas posted a decent price gain Thursday as temperatures for the next week are forecast to be quite hot in the West and Southeast at the beginning of the week, before dropping near the end of the week. Demand for electricity to run air conditioners is expected to be high in the Southeast but only moderate in the northern and eastern states as cooler air moves south from Canada.

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Production is expected to decline by 221 million cubic feet per day in July, according to the EIA’s latest drilling productivity report from earlier this month. That could help keep prices from declining further as the summer warms up.

Stockpiles are about 38% above their levels of a year ago and nearly 1.5% above the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.508 trillion cubic feet, around 35 billion cubic feet above the five-year average of 2.473 trillion cubic feet and 695 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 1.813 trillion cubic feet for the same period a year ago.

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, traded down about 0.1% to $84.56, in a 52-week range of $82.68 to $104.76.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.7%, at $11.24 in a 52-week range of $11.20 to $29.92. The 52-week low was set early Thursday.

EOG Resources Inc. (NYSE: EOG) traded down about 0.5% to $87.86. The 52-week range is $81.07 to $118.81.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 1.3%, at $13.55 in a 52-week range of $12.28 to $25.25.

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