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Natural Gas Price Ticks Higher on Expected Addition to Inventory

The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 73 billion cubic feet for the week ending September 11. Analysts were expecting a storage injection (increase) of around 73 billion cubic feet. The five-year average for the week is an increase of around 75 billion cubic feet, and last year’s addition for the week totaled 90 billion cubic feet.

Natural gas futures for October delivery traded up about 0.1% in advance of the EIA’s report, at around $2.65 per million BTUs, and rose slightly to $2.67 following release of the report. Last Thursday, natural gas closed at $2.67 per million BTUs and over the past five trading days natural gas futures peaked Tuesday at $2.79. The 52-week low for natural gas futures is $2.63. One year ago the price for a million BTUs was around $3.97.

In the most recent Short-Term Energy Outlook, the EIA forecast that natural gas inventories will end the injection season (October 31) with a total inventory of 3.84 trillion cubic feet, about 43 billion cubic feet above the five-year average and the third highest level on record. Spot prices are expected to remain below $3 per million BTUs through November, and the projected average price for natural gas in 2015 is $2.84, rising to $3.11 in 2016.

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Demand for natural gas is expected to be moderate for the rest of this week and into next as weather remains cooler over the West and Midwest into the middle of next week. Temperatures across most of the rest of the country are expected to be a few degrees above normal.

Stockpiles are nearly 16% above their levels of a year ago and about 4% above the five-year average.

The EIA reported that U.S. working stocks of natural gas totaled about 3.334 trillion cubic feet, around 125 billion cubic feet above the five-year average of 3.209 trillion cubic feet and 456 billion cubic feet above last year’s total for the same period. Working gas in storage totaled 2.878 trillion cubic feet for the same period a year ago.

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

Exxon Mobil Corp. (NYSE: XOM), the country’s largest producer of natural gas, traded up about 0.1%, at $74.37 in a 52-week range of $66.55 to $97.93.

Chesapeake Energy Corp. (NYSE: CHK) traded down about 3.2% to $8.71. The stock’s 52-week range is $6.01 to $25.64.

EOG Resources Inc. (NYSE: EOG) traded up about 0.4% to $80.26. The 52-week range is $68.15 to $106.09.

Furthermore, the United States Natural Gas ETF (NYSEMKT: UNG) traded down about 0.5%, at $12.55 in a 52-week range of $12.28 to $23.73.

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By Paul Ausick


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