Natural Gas Price Steady on Small Inventory Draw

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles decreased by 36 billion cubic feet for the week ending March 22.

Analysts were expecting a storage withdrawal of around 43 billion cubic feet. The five-year average for the week is a withdrawal of 41 billion cubic feet, and last year’s withdrawal totaled 66 billion cubic feet. Natural gas inventories fell by 47 billion cubic feet in the week ending March 15.

Natural gas futures for May delivery traded up less than a penny in advance of the EIA’s report, at around $2.71 per million BTUs, and traded essentially flat shortly after the announcement.

For the period between March 28 and April 3, NatGasWeather.com expects “moderate” demand and offers the following outlook:

Mild conditions will build across the Great Lakes, Ohio Valley, and Northeast the next few days with highs warming into the 40s to 60s. It will be very warm across the southern US and Mid-Atlantic Coast today and Fri with highs of 70s and 80s for light demand The West and central US will be unsettled but only slightly cool into Saturday before a more impressive cold shot with lows of teens to 30s drops out of Canada and sweeps across the northern, central, and eastern US this weekend through early next week, including cooling Texas and the South. However, warm conditions will again spread across the country late next week.

Total U.S. stockpiles increased week over week, rising slightly to around 20.5% below last year’s level but falling to 33.2% below the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 1.107 trillion cubic feet at the end of last week, around 551 billion cubic feet below the five-year average of 1.658 trillion cubic feet and 285 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 1.392 trillion cubic feet for the same period a year ago.

This week is the last of the EIA’s official winter withdrawal season. Injection season begins on April 1 and runs through the end of October. Last year, however, injections of new supplies on natural gas into storage were delayed until May, and the United States started the 2018–2019 heating season with stockpiles at a 13-year low. At the end of March 2018, U.S. stockpiles totaled 1.36 trillion cubic feet. A total storage withdrawal of around 64 billion cubic feet over the course of this week would match that level.

Here’s how share prices of the largest U.S. natural gas producers reacted to today’s report:

  • Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.3% to $80.59, in a 52-week range of $64.65 to $87.36.
  • Chesapeake Energy Corp. (NYSE: CHK) traded down about 1.1%, at $3.16 in a 52-week range of $1.71 to $5.60.
  • EOG Resources Inc. (NYSE: EOG) traded up about 0.4% at $94.95. The 52-week range is $82.04 to $133.53.

In addition, the United States Natural Gas ETF (NYSEARCA: UNG) traded down about 0.2%, at $23.92 in a 52-week range of $21.78 to $39.87.

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