Natural Gas Inventory Inventory Pushes Down Price

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The U.S. Energy Information Administration (EIA) today reported the U.S. natural gas stocks increased by 96 billion cubic feet last week, compared with an expected build of between 74 billion and 78 billion cubic feet anticipated by analysts. Natural gas futures prices were down by more than 1% in advance of the EIA’s report, at around $3.24 per million BTUs, and slipped further to around $3.20 immediately following the EIA report.

The EIA reported that U.S. working stocks of natural gas totaled nearly 2.94 trillion cubic feet, about 20 billion cubic feet higher than the five-year average of 2.92 trillion cubic feet. Working gas in storage totaled 3.24 trillion cubic feet for the same period a year ago. Natural gas inventories remain roughly in the middle of the five-year range.

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Earlier this week the EIA raised its production estimate for natural gas to 69.89 billion cubic feet a day in 2013, and the 2014 estimate was raised to 70.41 billion cubic feet per day. The EIA expects the average 2013 price at Henry Hub to be $3.71 per million BTUs, somewhat lower than its previous estimate of $3.76. Natural gas prices are now expected to average $3.95 per million BTUs in 2014.

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Here is how stocks of the largest U.S. natural gas producers are reacting to today’s report:

Exxon Mobil Corp. (XOM), the country’s largest producer of natural gas, is up 0.1%, at $91.42 in a 52-week range of $84.70 to $95.49. Exxon also reported poor second-quarter earnings earlier this morning.

Chesapeake Energy Corp. (CHK) is down 0.2%, at $24.77 in a 52-week range of $16.23 to $25.64.

EOG Resources Inc. (EOG) is up 0.4%, at $156.85 in a 52-week range of $105.45 to $161.47.

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The U.S. Natural Gas Fund (UNG) is down 0.4%, at $17.16 in a 52-week range of $16.59 to $24.09. The Market Vectors Oil Services ETF (OIH) is up 0.4%, at $45.28 in a 52-week range of $36.24 to $46.78. The first fund tracks spot prices; the second includes major drillers and services companies.

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