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Natural Gas Price Slips on Large Addition to Stockpiles

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 65 billion cubic feet for the week ending August 4. Analysts polled by The Wall Street Journal expected a storage injection (increase) of 55 billion cubic feet. The five-year average for the week is an increase of around 48 billion cubic feet, and last year’s addition for the week totaled 79 billion cubic feet.

Natural gas futures for October delivery traded down about two cents in advance of the EIA’s report, at around $2.94 per million BTUs, and dipped to about $2.87 following release of the report. Last Thursday, natural gas closed at $2.83 per million BTUs, and over the past five trading days, natural gas futures peaked Wednesday at $2.96. The 52-week low for natural gas futures is $2.64. One year ago the price for a million BTUs was around $3.90.

High temperatures in Texas and the Southeast kept demand up last week and those temperatures have continued into this week. Slightly cooler temperatures are expected in the region beginning this weekend, but temperatures are expected to rise in the Northwest, the Great Lakes region and the Northeast, and with the higher temperatures comes higher demand for cooling and increased demand for natural gas to generate electricity.

Stockpiles are about 21% above their levels of a year ago and about 3% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 2.977 trillion cubic feet, around 81 billion cubic feet above the five-year average of 2.896 trillion cubic feet and 521 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.456 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.3%, at $79.01 in a 52-week range of $76.33 to $100.31.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 3.6% to $7.75. The stock’s 52-week range is $6.85 to $27.24.

EOG Resources Inc. (NYSE: EOG) traded down about 0.9% to $79.25. The 52-week range is $72.86 to $110.47.

In addition, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 2.4%, at $13.67 in a 52-week range of $12.28 to $23.73.

By Paul Ausick