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U.S. Natural Gas: Weekly Analysis of the EIA Inventory Data

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The U.S. Energy Department's weekly inventory release showed a surprise increase in natural gas supplies. Despite this shock injection, the U.S. benchmark gained 4% last week on favorable weather conditions and the growing appetite for liquefied natural gas (“LNG”).   

Let us see how the natural gas situation looks like after the U.S. Energy Department's latest weekly inventory release:

EIA Reports a Surprise Buildup in Inventories

Stockpiles held in underground storage in the lower 48 states rose by 8 billion cubic feet (Bcf) for the week ended Nov 9, contrary to the guidance (of a 4 Bcf decline). However, the increase was below the five-year (2015-2019) average net addition of 33 Bcf and last year’s build of 12 Bcf for the reported week.

The latest uptick puts total natural gas stocks at 3.927 trillion cubic feet (Tcf) — 196 Bcf (5.3%) above the 2019 levels at this time and 176 Bcf (4.7%) higher than the five-year average.

Total supply of natural gas averaged 91.9 Bcf per day, down 2.4% on a weekly basis due to a decrease in dry production and lower shipments from Canada.

Daily consumption fell too — by 11.3% to 84.4 Bcf — primarily due to weaker demand from the residential/commercial, industrial and power sectors.  

Natural Gas Still Registers a Weekly Advance

Natural gas prices rose last week despite the unexpected inventory build. Futures for December delivery ended Friday at $2.995 per MMBtu on the New York Mercantile Exchange, up around 4% from the same time previous week. Prices received a lift on news of the steady onset of winter and expectations of cold weather. This resulted in greater consumption of natural gas for heating homes. Strong LNG feedgas demand in the export facilities boosted the price further.   

Is There Any Opportunity to Invest?

While the raging coronavirus pandemic continues to impact economic activity and, by extension, natural gas usage, there are stocks that could offer attractive returns.  

We suggest adding Antero Resources AR to your portfolio. The company, carrying a Zacks Rank #2 (Buy), has a strong footing in the prolific Appalachian Basin. About 68% of Antero Resources’ total output is natural gas.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One of the fast-growing natural gas producers in the United States, the company has seen the Zacks Consensus Estimate for 2020 improve 29.3% over 30 days.

Meanwhile, there are Zacks Rank #3 (Hold) natural gas stocks like EQT Corporation EQT, Cabot Oil & Gas COG, SilverBow Resources SBOW and CNX Resources CNX that investors may currently retain in their portfolio.

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EQT Corporation (EQT) : Free Stock Analysis Report
 
Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
 
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
SilverBow Resources Inc. (SBOW) : Free Stock Analysis Report
 
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