Energy

Natural Gas Price Dips on Larger-Than-Expected Inventory Decline

Paul Ausick

Published: January 19, 2017 11:05 am

Last Updated: January 12, 2020 3:43 pm

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 243 billion cubic feet for the week ending January 13. Analysts were expecting a storage decline of between 220 billion and 230 billion cubic feet. The five-year average for the week is a withdrawal of around 170 billion cubic feet, and last year’s storage decline for the week totaled 178 billion cubic feet. Natural gas inventories fell by 151 billion cubic feet in the week ending December 30.

Natural gas futures for February delivery traded down by about 1% in advance of the EIA’s report, at around $3.26 per million BTUs, and traded around $3.32 immediately after the data release. Natural gas closed at $3.30 per million BTUs on Wednesday, after falling from a high of $3.51 on Tuesday. The 52-week range for natural gas is $2.49 to $3.90. One year ago the price for a million BTUs was around $2.83.

Natural gas prices are expected to remain depressed as the most recent forecasts for the last two weeks of January have turned warmer than previously expected, dampening expected demand for heating fuel. Winter weather is still in the forecast, but the very cold Arctic air flowing south from Canada will be missing. Daytime temperatures could reach the 40s through the 60s in the northern part of the country and top out at around 80 in the south.

Stockpiles have now dropped to 12.9% below their levels of a year ago and 2.6% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.917 trillion cubic feet, around 77 billion cubic feet below the five-year average of 2.994 trillion cubic feet and 431 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.348 trillion cubic feet for the same period a year ago.

Here’s how share prices of the largest U.S. natural gas producers reacted to today’s report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 1.5%, at $84.97 in a 52-week range of $72.61 to $95.55.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 1.8% to $6.86. The stock’s 52-week range is $1.50 to $8.20.

EOG Resources Inc. (NYSE: EOG) traded down about 0.2% to $105.14. The 52-week range is $59.41 to $109.37.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.2%, at $8.27 in a 52-week range of $5.78 to $9.74.