US Natural Gas Futures Fell after the Inventories Report
EIA natural gas inventories
The EIA (U.S. Energy Information Administration) released its weekly US natural gas inventory report on September 21, 2017. It reported that US natural gas inventories rose by 97 Bcf (billion cubic feet) to 3,408 Bcf on September 8–15, 2017. Inventories rose 2.9% week-over-week but have fallen 3.8% or by 136 Bcf year-over-year.
A market survey estimated that US natural gas inventories would have risen by 91 Bcf on September 8–15, 2017. A larger-than-expected rise in inventories pressured US natural gas (DGAZ) (UGAZ) (UNG) prices on September 21, 2017.
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US natural gas futures
October US natural gas (BOIL) (GASL) futures were trading at $3.05 MMBtu (million British thermal units) at 10:30 AM EST on September 21, 2017, before the inventory data were released. Prices fell as low as $2.94 MMBtu or 2.5% after the release of the inventory data during the day. Prices settled 4.5% lower than the previous day’s settlement.
US natural gas (UGAZ) (DGAZ) prices have fallen to almost a two-week low. Lower natural gas prices have a negative impact on natural gas producers’ (XLE) (RYE) earnings like Newfield Exploration (NFX), Southwestern Energy (SWN), Exco Resources (XCO), and Antero Resources (AR).
US natural gas inventories rose by 51 Bcf during the same period in 2016. The five-year average rise for US natural gas inventories for this period of the year is 66 Bcf. US natural gas inventories rose by 91 Bcf on September 1–8, 2017.
US natural gas inventories rose more than the historical averages on September 8–15, 2017, which also pressured US natural gas prices on September 21, 2017.
US natural gas inventories were 21% above their five-year average in March 2017. They’re 2% above their five-year average for the week ending September 15, 2017. It suggests that US natural gas inventories are rebalancing toward historical average levels.
The EIA estimates that US natural gas inventories will fall below their five-year average in October 2017. A fall below the five-year average could have a bullish impact on US natural gas prices.
In the next part of this series, we’ll discuss why the US natural gas rig count hit a nine-week low.