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

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 81 billion cubic feet for the week ending May 26. Analysts were expecting a storage injection of 74 billion cubic feet. The five-year average for the week is an injection of 97 billion cubic feet, and last year’s storage injection for the week totaled 80 billion cubic feet. Natural gas inventories rose by 75 billion cubic feet in the week ending May 19.

Natural gas futures for June delivery traded up about 1.3% in advance of the EIA’s report, at around $3.07 per million BTUs, and slipped to around $3.04 shortly thereafter. The highest close for the past five trading days was registered last Friday at $3.31. The 52-week range for natural gas is $2.81 to $3.64. One year ago the price for a million BTUs was around $2.95.

Analysts at S&P Global Platts note that last week’s injection marked the fourth consecutive week of additions to storage that fell below the five-year average. This week’s injection kept that streak alive.

Demand for the next week is expected to be moderate largely due to expected cooler temperatures into the weekend across the northern United States. Temperatures are expected to be warmer than normal in the central, southern, and western portions of the country.

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Stockpiles fell week over week to 12.8% below last year’s level, but remain 9.8% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.525 trillion cubic feet, around 225 billion cubic feet above the five-year average of 2.300 trillion cubic feet and 370 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.895 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 this latest report:

• Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down less than 0.1%, at $80.49 in a 52-week range of $80.19 to $95.55. The low was posted this morning.
• Chesapeake Energy Corp. (NYSE: CHK) traded up about 1.2% to $5.12. The stock’s 52-week range is $3.93 to $8.20.
• EOG Resources Inc. (NYSE: EOG) traded up about 0.6% to $90.89. The 52-week range is $78.04 to $109.37.

The United States Natural Gas ETF (NYSEMKT: UNG) traded down about 1.6%, at $6.81 in a 52-week range of $6.48 to $9.73.

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