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US Natural Gas Inventories Are 14% above Their 5-Year Average

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EIA’s natural gas inventories 

The EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report on March 30, 2017. It reported that US natural gas inventories fell by 43 Bcf (billion cubic feet) to 2,049 Bcf from March 17–24, 2017. Inventories fell 2.1% week-over-week and 17% year-over-year. The fall in inventories is bullish for natural gas (FCG) (BOIL) (UNG) prices.

However, US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016—the highest level ever. Changes in inventories impact natural gas prices. For more on natural gas prices and the weather, read Part 1 and Part 2 of this series.

Wall Street Journal survey estimated that US natural gas inventories would have fallen by 42 Bcf from March 17–24, 2017. Natural gas (DGAZ) (UGAZ) prices fell on March 30, 2017, despite the expected draw in natural gas inventories.

The five-year average natural gas withdrawal for this period is 27 Bcf. Natural gas inventories fell by 25 Bcf during the same period in 2016. They fell by 150 Bcf in the week ending March 17, 2017.

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What’s the impact?  

For the week ending March 24, 2017, US natural gas inventories are 14% higher than their five-year average. High inventories could pressure natural gas prices. US natural gas inventories are the biggest bearish driver of natural gas prices after production. However, cold weather could drive prices in the short term. For more on the weather, read the previous parts of the series.

Volatility in natural gas prices impacts oil and gas producers’ profitability such as Rice Energy (RICE), Range Resources (RRC), Rex Energy (REXX), and Cabot Oil & Gas (COG).

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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