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US Natural Gas Inventories Boost Natural Gas Prices

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Jul. 22 2016, Published 12:24 p.m. ET

EIA’s natural gas inventories 

On July 21, 2016, the EIA (U.S. Energy Information Administration) published its weekly natural gas inventory report. It reported that US natural gas inventories rose by 34 Bcf (billion cubic feet) to 3.28 Tcf (trillion cubic feet) from July 8–15, 2016.

A Reuters survey projected that US natural gas inventories might have risen by 39 Bcf for this period. The less-than-expected rise in US natural gas inventories pushed natural gas prices higher on July 21. To learn more about natural gas prices, please read the previous part of this series.

The five-year average natural gas inventory addition for this period was 61 Bcf. US natural gas inventories rose by 59 Bcf for the same period in 2015. They rose by 64 Bcf in the week ending July 8, 2016.

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US natural gas inventories by region 

The EIA divides the US into five storage regions:

  1. East
  2. Midwest
  3. Mountain
  4. Pacific
  5. South Central

Below are the movements in natural gas inventories for these regions from July 8–15, 2016.

  • The East region rose by 19 to 697 Bcf.
  • The Midwest region rose by 16 to 801 Bcf.
  • The Mountain region rose by two to 210 Bcf.
  • The Pacific region fell by one to 318 Bcf.
  • The South Central region fell by two to 1.251 Tcf.

Impact of natural gas inventories

For the week ending July 15, 2016, US gas natural gas inventories were 16.8% more than their five-year average and 20.6% more than the same period in 2015.

The EIA estimated that US natural gas inventories would be ~4.0 Tcf by the end of October 2016—the beginning of the heating season in 2016–2017. It would be the highest level on record for this period of the year. High natural gas inventories could weigh on natural gas prices.

Multiyear low natural gas prices impact US natural gas producers such as Comstock Resources (CRK), Gulfport Energy (GPOR), and Ultra Petroleum (UPL). The ups and downs in oil and gas prices can impact ETFs and ETNs such as the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL) and the VelocityShares 3x Inverse Natural Gas ETN (DGAZ).

The US natural gas rig count also plays a vital role in driving natural gas prices. To learn more, read the next part of this series. 

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