EIA’s natural gas inventories
The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on December 1, 2016. It reported that US natural gas inventories fell by 50 Bcf (billion cubic feet) to 3,995 Bcf between November 18 and November 25, 2016. US natural gas inventories fell due to colder weather, which resulted in higher demand for natural gas. US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016, the highest level ever.
A Wall Street Journal survey estimated that US natural gas inventories would fall by 53 Bcf between November 18 and November 25, 2016. The five-year average natural gas change for this period is an addition of 3.8 Bcf. Natural gas inventories rose by four Bcf during the same period in 2015. They had fallen by two Bcf in the week ending on November 18, 2016. The fall in inventories in the week to November 25 in comparison helped push natural gas prices higher despite the slightly smaller-than-expected fall in inventories. Prices hit a two-year high on December 1, 2016. For more on prices, read part one and part two of this series.
It was the second draw of the season for US natural gas inventories. The draw boosted natural gas prices for the ninth time in the ten trading sessions to December 1, 2016. For more on prices, read part one and part two of this series.
For the week ending November 25, 2016, US natural gas inventories were 6.3% higher than their five-year average. They were also 0.6% more than the corresponding period in 2015.
Near-record US natural gas inventories could pressure natural gas prices. Lower natural gas prices can have a negative impact on the profitability of oil and gas producers such as Cimarex Energy (XEC), Range Resources (RRC), Cabot Oil & Gas (COG), 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 United States Brent Oil ETF (BNO), the Direxion Daily Natural Gas Related Bull 3X ETF (GASL), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the ProShares UltraShort Bloomberg Crude Oil (SCO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), 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.