Natural Gas Price Rises as Storage Growth Continues to Slow Down

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 68 billion cubic feet for the week ending May 12. Analysts were expecting a storage injection of 61 billion cubic feet. The five-year average for the week is an injection of around 87 billion cubic feet, and last year’s storage injection for the week totaled 71 billion cubic feet. Natural gas inventories rose by 45 billion cubic feet in the week ending May 5.

Natural gas futures for June delivery traded up by about 2.4% in advance of the EIA’s report, at around $3.29 per million BTUs, and slipped to $3.28 shortly thereafter. The highest close for the past five trading days was registered last Friday at $3.50. The 52-week range for natural gas is $2.76 to $3.64. One year ago the price for a million BTUs was around $2.88.

In a preview of this week’s report, Platts Analytics analyst Mitch DeRubis said:

Injection activity appears to have increased in every region last week besides the East where cooler temperatures prompted a bump in demand.

Temperatures in the Northeast dropped sharply compared to the previous week, down more than eight degrees, leading to an increase in modeled residential and commercial estimates of 1.9 [billion cubic feet per day], which could be overstated. The largest week-over-week increases are estimated to take place in the Midwest and South Central regions, where injections are expected to total 19 [billion cubic feet] and 20 [billion cubic feet], respectively.

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Stockpiles fell week over week to 13.7% below last year’s level and are now 12.1% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.369 trillion cubic feet, around 256 billion cubic feet above the five-year average of 2.113 trillion cubic feet and 375 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.744 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 about 0.3%, at $81.81 in a 52-week range of $80.30 to $95.55.
• Chesapeake Energy Corp. (NYSE: CHK) traded up about 0.6% to $5.52. The stock’s 52-week range is $3.56 to $8.20.
• EOG Resources Inc. (NYSE: EOG) traded down about 0.3% to $92.63. The 52-week range is $77.66 to $109.37.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 0.5% at $7.47 in a 52-week range of $6.36 to $9.73.

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