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Natural Gas Price Ticks Higher After Storage Report

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 53 billion cubic feet for the week ending August 14. Analysts were expecting a storage injection (increase) of 70 billion cubic feet. The five-year average for the week is an increase of around 54 billion cubic feet, and last year’s addition for the week totaled 86 billion cubic feet.

Natural gas futures for October delivery traded flat in advance of the EIA’s report, at around $2.73 per million BTUs, and ticked up to $2.77 following release of the report. Last Thursday, natural gas closed at $2.82 per million BTUs, and over the past five trading days, natural gas futures peaked last Friday at $2.87. The 52-week low for natural gas futures is $2.64. One year ago the price for a million BTUs was around $3.90.

Cooler weather moved in last week, pushing down demand for cooling. The forecast for the rest of this week and on into next is for more cool temperatures, showers and thunderstorms over the central, southern and eastern United States. Warm temperatures in the west are expected to continue and the Atlantic coast is also expected to remain hot.

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Analysts at Bentek, a unit of Platts, pointed out earlier this week that natural gas production in the U.S. averaged 58.7 billion cubic feet per day in 2009, compared with an average of 72.2 billion cubic feet this year. In the depths of the recent recession, in 2009, natural gas traded at $3.12 per million BTUs, compared with Wednesday’s price of $2.67.

Stockpiles are about 19% above their levels of a year ago and about 2.7% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.030 trillion cubic feet, around 80 billion cubic feet above the five-year average of 2.950 trillion cubic feet and 488 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.542 trillion cubic feet for the same period a year ago.

Here is how stocks of the largest U.S. natural gas producers reacted to this latest report:

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded down about 1%, at $75.46 in a 52-week range of $76.42 to $100.31. The low was posted Thursday morning.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 0.3% to $7.32. The stock’s 52-week range is $6.85 to $27.24.

EOG Resources Inc. (NYSE: EOG) traded down about 0.4% to $76.80. The 52-week range is $72.86 to $110.47.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded up about 1.6%, at $13.17 in a 52-week range of $12.28 to $23.73.

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By Paul Ausick