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Will US Natural Gas Futures Test 2016 High?

PART:
1 2 3 4 5 6 7 8
Part 3
Will US Natural Gas Futures Test 2016 High? PART 3 OF 8

US Natural Gas Inventories Rose for 5th Straight Week

EIA’s natural gas inventories 

The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on May 4, 2017. It reported that US natural gas inventories rose 67 Bcf (billion cubic feet) to 2,256 Bcf between April 21 and April 28, 2017. Inventories rose 3.1% week-over-week but fell 13.7% YoY (year-over-year). US natural gas inventories rose for the fifth straight week. The rise in inventories is bearish for natural gas (UNG) (GASL) (BOIL) prices.

US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016, the highest level ever. Inventories are down ~44% from their peak level. Changes in inventories impact natural gas prices. For more on natural gas prices and weather, read part one and part two of this series.

US Natural Gas Inventories Rose for 5th Straight Week

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A market survey estimated that US natural gas inventories would rise by 58 Bcf between April 21 and April 28, 2017.

A larger-than-expected rise in natural gas inventories pressured natural gas (UGAZ) (FCG) prices on May 4, 2017. The five-year average natural gas addition for this period is 64 Bcf. Inventories rose by 68 Bcf during the same period in 2016. They rose by 74 Bcf in the week ending April 21, 2017.

Lower natural gas prices have a negative impact in oil and gas producers’ profitabilities such as Cabot Oil & Gas (COG), WPX Energy (WPX), Newfield Exploration (NFX), and Rice Energy (RICE).

What’s the impact?  

For the week ending April 28, 2017, US natural gas inventories were 15.5% higher than their five-year average. They were 21.0% higher than their five-year average in early March 2017. The expectation of slowing inventories could support natural gas prices in 2Q17 and 2017.

Next, let’s take a look at US natural gas inventories by region. We’ll also look at the US natural gas inventory forecast for October 2017.

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