US natural gas inventories by region
The EIA (U.S. Energy Information Administration) divides the US into the following five natural gas storage regions:
- South Central
Below are the movements in natural gas inventories for the storage regions from December 23–30, 2016.
- East – fell 20 Bcf (billion cubic feet) to 737 Bcf
- Midwest – fell 25 Bcf to 921 Bcf
- Mountain – fell 10 Bcf to 207 Bcf
- Pacific – fell 8 Bcf to 275 Bcf
- South Central – rose 14 Bcf to 1,171 Bcf
Natural gas inventories and prices
US natural gas inventories were at 3,311 Bcf for the week ending December 30, 2016. It’s 0.6% lower than the five-year average, as we discussed in the previous part of this series. Sharper-than-average falls in US natural gas inventories during the winter season could support US natural gas (FCG) (BOIL) (UGAZ) (UNG) (GASL) prices.
Higher natural gas prices can have a positive impact on oil and gas producers’ profitability such as Antero Resources (AR), Newfield Exploration (NFX), Southwestern Energy (SWN), WPX Energy (WPX), and Range Resources (RRC).
Moves in oil and natural gas prices also impact ETFs and ETNs such as the VelocityShares 3X Long Natural Gas ETN (UGAZ), the Direxion Daily Natural Gas Related Bull 3X ETF (GASL), the ProShares Ultra Bloomberg Crude Oil (UCO), United States Natural Gas ETF (UNG), and the VelocityShares 3x Inverse Natural Gas ETN (DGAZ).
End of winter natural gas inventories
The EIA estimates that US natural gas inventories will be at 1,940 Bcf by the end of March 2017—20.0% higher than the five-year average. High US natural gas inventories at the end of the winter heating season could pressure natural gas prices in 2017. Inventories start to build again at the end of the winter. For more on inventories, read the previous part of this series.
The US natural gas rig count also plays a vital role in driving natural gas prices. We’ll discuss the US natural gas rig count in the next part.