Natural Gas Prices Rise Following Inventory Report

Blue flames of a gas stove
Blue flames of a gas stove

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 46 billion cubic feet last week, compared with an expected build of 55 billion to 59 billion cubic feet anticipated by analysts. Natural gas futures prices were trading about 1% lower in advance of the EIA's report, at around $3.75 per million BTUs, and rose to around $3.79 immediately following the report.

The EIA said that U.S. working stocks of natural gas totaled 3.3 trillion cubic feet, about 18 billion cubic feet higher than the five-year average. Working gas in storage totaled 3.49 trillion cubic feet for the same period a year ago. Natural gas inventories remain roughly in the middle of the five-year range. The five-year average increase for the period is 74 billion cubic feet.

Natural gas prices have risen to two-month highs in the past week, partly due to expectations of a smaller than usual inventory increase. That is what traders got today. Natural gas storage injections ahead of the winter heating season have not yet really begun. Once these injections get going, prices might have a hard time staying where they are, unless unusually cool weather appears or there is a disruption in gas production in the Gulf of Mexico.

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

Exxon Mobil Corp. (NYSE: XOM), the country's largest producer of natural gas, is down fractionally at $89.51, in a 52-week range of $84.70 to $95.49.

Chesapeake Energy Corp. (NYSE: CHK) is up 0.4%, at $27.40 in a 52-week range of $16.23 to $27.46. The high was set earlier Thursday morning.

EOG Resources Inc. (NYSE: EOG) is down fractionally, at $171.68 in a 52-week range of $107.76 to $172.81. EOG's high was set earlier this morning as well.

The U.S. Natural Gas Fund (NYSEMKT: UNG) is up 1.3%, at $19.75 in a 52-week range of $16.59 to $24.09. The Market Vectors Oil Services ETF (NYSEMKT: OIH) is up 0.2%, at $48.40 in a 52-week range of $36.24 to $48.52. The first fund tracks spot prices; the second includes major drillers and services companies.

Filed under: Commodities & Metals Tagged: CHK, EOG, OIH, UNG, XOM