Natural Gas Price Slips Following Massive Inventory Addition

Natural gas futures for October delivery traded down about 0.3% in advance of the EIA’s report, at around $2.55 per million BTUs, and dropped to around $2.53, a new 52-week low, following release of the EIA report. Last Thursday natural gas closed at $2.64 per million BTUs and over the past 5 trading days natural gas futures peaked last Friday at around $2.66. The 52-week low for natural gas futures is $2.55. One year ago the price for a million BTUs was around $3.90.

Natural gas posted a five-month low earlier this week as demand declined with milder weather. Warmer weather is forecast for the next week or so, but at this time of the year that only means that temperatures will not be cool enough for consumers to turn on their furnaces or warm enough to turn on their air conditioners. One research firm has cut its average price forecast for 2016 to just $3.00 per thousand cubic feet rising to $3.50 in 2017. Supply is plentiful and demand growth is low.

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Temperatures over the South and the Southwest remain quite warm while both the Southeast and the North Central states should experience cooler and wetter weather.

Stockpiles are nearly 16% above their levels of a year ago and about 4.5% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.440 trillion cubic feet, around 148 billion cubic feet above the five-year average of 3.292 trillion cubic feet and 466 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.974 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 0.2%, at $73.12 in a 52-week range of $66.55 to $97.20.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 2.7% to $7.38. The stock’s 52-week range is $6.01 to $24.43.

EOG Resources Inc. (NYSE: EOG) traded down about 0.9% to $72.40. The 52-week range is $68.15 to $103.04.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.3%, at $11.98 in a 52-week range of $11.91 to $23.73. The low was posted just after the storage report was released.

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