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US Natural Gas Inventories: Bullish or Bearish for 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 April 6, 2017. It reported that US natural gas inventories rose 2.0 Bcf (billion cubic feet) to 2,051 Bcf from March 24–31, 2017. Inventories rose 0.10% week-over-week but fell 17.2% YoY (year-over-year). The YoY fall in inventories is bullish for natural gas (DGAZ) (UGAZ) (FCG) prices.

However, US natural gas inventories hit 4,047 Bcf for the week ended 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.

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Wall Street Journal survey estimated that US natural gas inventories would rise 7.8 Bcf from March 24–31, 2017. Natural gas (UNG) (BOIL) prices rose on April 6, 2017, due to a less-than-expected rise in natural gas inventories. Moves in natural gas prices impact the profitabilities of oil and gas producers such as Range Resources (RRC), Rice Energy (RICE), WPX Energy (WPX), and Memorial Resource Development (MRD).

The five-year average natural gas withdrawal for this period is 13.0 Bcf. Natural gas inventories rose 6.0 Bcf during the same period in 2016. They fell 43.0 Bcf in the week ended March 24, 2017.

What’s the impact? 

For the week ended March 31, 2017, US natural gas inventories were 14.8% higher than their five-year average. They were 21.0% higher than their five-year average in early March 2017. Slowing inventories could support natural gas prices.

Next, let’s take a look at US natural gas inventories by region. We’ll also look at the US natural gas inventory forecast for October 2017.

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