US natural gas inventory
On May 12, 2016, the EIA (U.S. Energy Information Administration) released its Weekly Natural Gas Inventory report. It reported that the US natural gas inventory rose by 56 Bcf (billion cubic feet) to 2,681 Bcf for the week ending May 6, 2016, compared to the previous week.
A Wall Street Journal survey estimated that natural gas inventories could have risen by 58 Bcf for this period. The five-year average natural gas addition during this period was 79 Bcf. Natural gas inventories added 101 Bcf during the same period in 2015. The US natural gas inventory has fallen by 962 Bcf so far in 2016.
US natural gas inventory by region
The EIA divides the United States into five storage regions: East, Midwest, Mountain, Pacific, and South Central. In the South Central region, natural gas inventories rose by 18 Bcf to 1,182 Bcf for the week ending May 6, 2016, compared to the previous week.
In the Midwest region, inventories rose by 16 Bcf to 582 Bcf for the same period. The natural gas inventory rose by 14 Bcf to 468 Bcf in the East region. In the Mountain and Pacific regions, natural gas inventories rose by 4 Bcf each to 161 Bcf and 288 Bcf, respectively.
The South Central, Midwest, and East regions contribute the majority of US natural gas stocks.
Nationwide natural gas inventories are 44% higher than they were in the same period in 2015. They are also 43.5% higher than the five-year average for this time of year. High natural gas inventories could limit the upside for natural gas futures.
Natural gas prices influence the margins of upstream players such as Range Resources (RRC), EXCO Resources (XCO), Ultra Petroleum (UPL), and Gulfport Energy (GPOR). ETFs and ETNs such as the VelocityShares 3x Inverse Natural Gas ETN (DGAZ) and the First Trust ISE-Revere Natural Gas ETF (FCG) are also affected by natural gas prices.
The US natural gas rig count and production also play a vital role in driving natural gas prices. To learn more, please read the next two parts of the series.