US natural gas inventory report
On February 4, 2016, the EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report. It reported that US natural gas had fallen 152 Bcf (billion cubic feet) to 2,934 Bcf for the week ended January 29, 2016. US natural gas inventory also fell 211 Bcf (billion cubic feet) in the week ended January 22, 2016, and eight consecutive weeks before that.
US natural gas inventory by regions
The EIA divides the United States into five storage regions: East, Midwest, Mountain, Pacific, and South Central. US natural gas inventory fell the most in the East region by 54 Bcf for the week ended January 29, 2016. The South Central and Midwest regions fell 47 Bcf and 44 Bcf, respectively, for the same period.
US natural gas inventory estimates and impact
Industry polls had suggested that natural gas inventory might fall by 200 Bcf for the week ended January 29, 2016. But the much-less-than-expected decline suggests that mild weather curbed the heating needs during the peak winter season. Consequently, on February 4, US natural gas collapsed.
The current US natural gas inventories are 20% more than the levels of 2,444 Bcf in 2014. They’re also 18% more than the five-year seasonal average of 2,489 Bcf.
The historic low natural gas prices affect oil and gas producers such as Cabot Oil & Gas (COG), Rice Energy (RICE), Southwestern Energy (SWN), Devon Energy (DVN), EXCO Resources (XCO), QEP Resources (QEP), and Gulfport Energy (GPOR). The natural gas production mix for these stocks is more than 50% of their total natural gas production portfolios.
ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the VelocityShares 3X Long Natural Gas ETN (UGAZ), and the PowerShares DB Energy ETF (DBE) are influenced by the ups and down in natural gas prices.
Read the next part of the series to know the latest update on the forecast for natural gas.