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Natural Gas Inventory Falls for 4th Straight Week

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Natural gas inventory

On Wednesday, December 24, 2015, the EIA (U.S. Energy Information Administration) published its weekly natural gas inventory report. The government agency reported that the US natural gas inventory fell by 32 Bcf (billion cubic feet) to 3,814 Bcf for the week ending December 18. Market surveys projected a natural gas inventory drop of 25 Bcf for the week. The greater-than-expected inventory drop boosted natural gas prices. As a result, natural gas prices saw their highest weekly gain in the last two years, rising 14.3% last week. The US natural gas inventory fell for the fourth straight week.

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US natural gas storage regions

The EIA divides natural gas storage into five regions: the East, Midwest, Mountain, Pacific, and South Central regions. The natural gas inventories dropped the most in the Pacific and Midwest regions, falling 15 Bcf in both regions for the week ending December 18.

The current natural gas inventory is 12.1% more than the five-year average of 3,403 Bcf and 17.2% more than the 3,253 Bcf recorded in 2014. The US natural gas inventory fell due to a cold winter and a marginal drop in production for the week ending December 18. However, the natural gas inventory remains near record highs and will keep putting pressure on natural gas prices.

Impact 

The recent surge in natural gas prices benefits US natural gas producers like Rice Energy (RICE), Anadarko Petroleum Corporation (APC), Noble Energy (NBL), and Chesapeake Energy Corporation (CHK). The volatility in natural gas prices also affects ETFs like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DB Energy Fund (DBE), and the PowerShares DWA Energy Momentum Portfolio (PXI).

Read the next part of this series to explore the latest natural gas price trends.

 

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