Lower US Natural Gas Inventories, Prices Reach a 2-Week High
EIA’s natural gas inventories
The EIA (U.S. Energy Information Administration) released its Weekly Natural Gas Storage Report on June 15, 2017. It reported that weekly US natural gas inventories rose by 78 Bcf (billion cubic feet) or 2.9% to 2,709 Bcf on June 2–9, 2017. However, US inventories have fallen 10.6% year-over-year.
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A market survey estimated that inventories would have risen by 89 Bcf during the same period. A less-than-expected rise in inventories supported US natural gas (BOIL) (UGAZ) (UNG) prices on June 15, 2017. Prices are at the highest level so far in June 2017.
Higher natural gas prices have a positive impact on natural gas exploration and production companies’ earnings like EQT (EQT), Gulfport Energy (GPOR), Cabot Oil & Gas (COG), and Newfield Exploration (NFX).
US natural gas inventories rose by 106 Bcf or 4.3% in the week ending June 2, 2017. The less-than-expected rise compared to historical averages also supported natural gas prices on June 15, 2017. The five-year average rise is 87 Bcf during the same period.
Inventories were 9.2% higher than the five-year average for the week ending June 9, 2017. In March 2017, inventories were 21.0% higher than the five-year average. According to the EIA’s June 2017 Short-Term Energy Outlook report, inventories are expected to be 0.3% higher than the five-year average in December 2017. The expectation of slowing inventories by the end of 2017 and early 2018 could support US natural gas prices. Weather also impacts inventories. Read the previous part of the series to understand, how the weather could impact prices.
In the next part, we’ll discuss the how the US crude oil and natural gas rig count impacts prices.