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US Natural Gas Inventories Boosted Natural Gas Prices

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EIA’s natural gas inventories 

The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on January 12, 2017. It reported that US natural gas inventories fell by 151 Bcf (billion cubic feet) to 3,160 Bcf between December 30, 2016, and January 6, 2017.

US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016—the highest level ever. However, inventories are off their record levels due to cold weather in the past few weeks. For more on natural gas (FCG) (BOIL) (GASL) prices and the weather, read Part 1 and Part 2 of this series.

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A Wall Street Journal survey estimated that US natural gas inventories would have fallen by 145 Bcf between December 30, 2016, and January 6, 2017. Natural gas (FCG) (BOIL) (UNG) (GASL) prices rose on January 12, 2017, due to the better-than-expected decline in inventories. For more on prices, read Part 1 of this series.

The five-year average natural gas withdrawal for this period is 167 Bcf. Natural gas inventories fell by 168 Bcf during the same period in 2015. They fell by 49 Bcf in the week ending December 30, 2016.

What’s the impact? 

A record withdrawal of natural gas over the last two weeks of 2016 pushed natural gas (FCG) (BOIL) (UNG) (GASL) prices to 24-month highs. For the week ending January 6, 2017, US natural gas inventories were 0.1% lower than the five-year average. They’re also 10% less than the same period in 2015.

Falling US natural gas inventories and the cold winter could support natural gas prices. High natural gas (FCG) (BOIL) (UNG) prices would have a positive impact on oil and gas producers’ profitability such as EXCO Resources (XCO), Cimarex Energy (XEC), Southwestern Energy (SWN), and Memorial Resource Development (MRD).

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.

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