Natural gas futures for September delivery traded down about one cent in advance of the EIA’s report, at around $2.90 per million BTUs, and dipped to about $2.88 following release of the report. Last Thursday, natural gas closed at $2.74 per million BTUs, and natural gas futures peaked at around $2.91 in the past five days. The 52-week low for natural gas futures is $2.59. One year ago the price for a million BTUs was around $3.95.
Research firm SNL Kagan reported earlier this month that U.S. electricity generation from natural-gas fired power plants surpassed generation from coal-fired plants in April for the first time ever. Natural gas drove 31% of all electricity generation in April, compared to coal’s 30% of total generation. In April of 2010, coal-fired plants generated 44% of all U.S. electricity and natural gas generated 22%.
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New regulations related to power plant emissions and low natural gas prices have combined to lead the turn away from coal-fired generation. The impact of the U.S. Supreme Court’s decision in late June regarding the U.S. EPA’s rule on mercury emissions ultimately will have little impact on the switch from coal to natural gas. Another factor for April, however, was low demand. Compared with January of this year, natural gas-fired generation was 9% lower and coal-fired generation was down 33%.
Summer weather has finally arrived over most of the United States and demand for cooling is driving up demand for natural gas. East Texas and the southeastern portion of the country are expected to see temperatures in triple digits for much of the next couple of weeks.
Stockpiles are about 31% above their levels of a year ago and 2.7% above the five-year average.
The EIA reported that U.S. working stocks of natural gas totaled about 2.767 trillion cubic feet, around 73 billion cubic feet above the five-year average of 2.694 trillion cubic feet and 653 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.114 trillion cubic feet for the same period a year ago.
Here is how stocks of the largest U.S. natural gas producers reacting to this latest report:
Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.5% to $83.15, in a 52-week range of $81.49 to $104.76.
Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.5%, at $11.24 in a 52-week range of $9.94 to $27.97.
EOG Resources Inc. (NYSE: EOG) traded down about 0.4% to $82.91. The 52-week range is $81.07 to $118.81.
In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.1%, at $13.89 in a 52-week range of $12.28 to $23.73.
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