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Analyzing the EIA’s Weekly Natural Gas Inventory Report

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Dec. 16 2016, Published 9:14 a.m. ET

EIA’s natural gas inventories 

The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on December 15, 2016. It reported that US natural gas inventories fell by 147 Bcf (billion cubic feet) to 3,806 Bcf from December 2–9, 2016. US natural gas inventories fell because of higher demand due to colder weather. US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016—the highest level ever.

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Wall Street Journal survey estimated that US natural gas inventories would have fallen by 130 Bcf from December 2–9, 2016. The larger-than-expected fall in US natural gas inventories limited the downside for natural gas (FCG) (BOIL) (UNG) (GASL) prices on December 15, 2016. For more on prices, read Part 1 and Part 2 of this series.

It’s the fourth draw of the season for US natural gas inventories. The five-year average natural gas withdrawal for this period is 79 Bcf. Natural gas inventories fell by 46 Bcf during the same period in 2015. They fell by 42 Bcf in the week ending on December 2, 2016.

Impact

For the week ending December 9, 2016, US natural gas inventories were 5.1% higher than the five-year average. However, they are 1.3% lower than the same period in 2015.

High US natural gas inventories could pressure natural gas prices. Lower natural gas prices can have a negative impact on oil and gas producers’ profitability such as Cabot Oil & Gas (COG), Antero Resources (AR), Cimarex Energy (XEC), and Memorial Resource Development (MRD).

Volatility in crude oil and natural gas prices can impact funds such as the United States Natural Gas ETF (UNG), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), 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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