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Natural Gas Price Sustains Increase Following Storage Report

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 2 billion cubic feet for the week ending March 31. Analysts surveyed by S&P Global Platts were expecting a storage injection of 10 billion cubic feet. The five-year average for the week is a withdrawal of around 13 billion cubic feet, and last year's storage increase for the week totaled 6 billion cubic feet. Natural gas inventories fell by 43 billion cubic feet in the week ending March 31.

April 1 marked the beginning of the natural gas injection season, and we should expect the nation's stockpiles to begin rising again. The injection season ends October 31.

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Natural gas futures for May delivery traded up by about 0.7% in advance of the EIA's report, at around $3.30 per million BTUs, and traded at $3.31 shortly after the data release. Natural gas closed at $3.27 per million BTUs on Wednesday, about 1% lower than the five-day high of $3.30 set on Tuesday. The 52-week range for natural gas is $2.56 to $3.65. One year ago the price for a million BTUs was around $2.67.

Platts analyst Mitch DeRubis said:

The tail end of the cold weather that caused last week's above-average withdrawal of 43 Bcf [billion cubic feet] gave way to significantly warmer temperatures in the major heating demand regions of the Midwest and Northeast, averaging 7.3 degrees and 10.3 degrees warmer, respectively, than the previous week's averages. The rising temperatures in the two regions led residential and commercial demand estimates to fall by an average 2.0 Bcf/d and 4.4 Bcf/d in the Midwest and Northeast, respectively, accounting for the majority of the drop in total U.S. residential and commercial estimates.

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Stockpiles fell week over week to 17% below last year's level, and they are now 13.9% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.051 trillion cubic feet, around 265 billion cubic feet above the five-year average of 1.786 trillion cubic feet and 427 billion cubic feet below last year's total for the same period. Working gas in storage totaled 2.478 trillion cubic feet for the same period a year ago.

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

  • Exxon Mobil Corp. (XOM), the country's largest producer of natural gas, traded up about 0.8%, at $83.15 in a 52-week range of $80.31 to $95.55.

  • Chesapeake Energy Corp. (CHK) traded up about 4.5% to $6.38. The stock’s 52-week range is $3.54 to $8.20.

  • EOG Resources Inc. (EOG) traded up about 1.2% to $98.73. The 52-week range is $70.39 to $109.37.

In addition, the United States Natural Gas ETF (UNG) traded up about 1.4%, at $7.88 in a 52-week range of $6.36 to $9.74.

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