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Decoding the EIA’s Weekly Natural Gas Inventory Report

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EIA’s natural gas inventory report

The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on December 22, 2016. It reported that US natural gas inventories fell 209 Bcf (billion cubic feet) to 3,597 Bcf from December 9–16, 2016.

Natural gas inventories fell because of higher demand due to colder weather. US natural gas inventories hit 4,047 Bcf for the week ended November 11, 2016. It was the highest level ever.

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Wall Street Journal survey estimated that US natural gas inventories would fall 200 Bcf from December 9–16, 2016. The larger-than-expected fall in US natural gas inventories limited the downside for natural gas (FCG) (BOIL) (UNG) (GASL) prices on December 22, 2016. For more on prices, read Part 1 and Part 2 of this series.

It’s the fifth draw of the season for US natural gas inventories. The five-year average natural gas withdrawal for this period is 101 Bcf. Natural gas inventories fell 32 Bcf during the same period in 2015. They fell 147 Bcf in the week ended December 9, 2016.

What’s the impact?

For the week ended December 16, 2016, US natural gas inventories were 2.2% higher than the five-year average. However, they’re 6.0% lower than the same period in 2015.

High US natural gas inventories could pressure natural gas prices. Lower natural gas prices could have a negative impact on the profitability of oil and gas producers such as Southwestern Energy (SWN), EXCO Resources (XCO), Cimarex Energy (XEC), and Memorial Resource Development (MRD).

The roller coaster ride in crude oil and natural gas prices can impact funds such as the United States Natural Gas ETF (UNG), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the United States Brent Oil ETF (BNO), the Direxion Daily Natural Gas Related Bull 3X ETF (GASL), the ProShares UltraShort Bloomberg Crude Oil (SCO), and the PowerShares DWA Energy Momentum ETF (PXI).

Next, we’ll take a look at US natural gas inventories by region. We’ll also look at the US natural gas inventory forecast for March 2017.

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