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Large Rise in US Natural Gas Inventories Pressured Prices

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EIA’s natural gas inventories 

On May 25, 2017, the EIA (U.S. Energy Information Administration) released its weekly natural gas inventory report. It stated that US natural gas inventories rose by 75 Bcf (billion cubic feet) to 2,444 Bcf on May 12–19, 2017.

US natural gas inventories rose 3.2% for the week ending May 19, 2017—compared to the previous week. However, natural gas inventories have fallen 13.9% YoY (year-over-year). An S&P Global Platts survey estimated that inventories would have risen by 67 Bcf on May 12–19, 2017. A larger-than-expected rise in inventories pressured natural gas (FCG) (BOIL) (UNG) prices on May 25, 2017.

Lower natural gas prices have a negative impact in oil and gas producers’ profitabilities such as Southwestern Energy (SWN), Cabot Oil & Gas (COG), Range Resources (RRC), and Memorial Resource Development (MRD).

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US natural gas inventories by region 

Changes in natural gas inventories for the storage regions on May 12–19, 2017, were as follows:

  • East – rose by 23 Bcf (billion cubic feet) to 390 Bcf
  • Midwest – rose by 22 Bcf to 562 Bcf
  • Mountain – rose by 5 Bcf to 166 Bcf
  • Pacific – rose by 6 Bcf to 250 Bcf
  • South Central – rose by 19 Bcf to 1,076 Bcf 

What’s the impact?  

As of last week, inventories were 10.9% higher than the five-year average. In March 2017, inventories were 21.0% higher than the five-year average. The expectation of slowing inventories could support natural gas prices.

In the next part, we’ll discuss the US natural gas rig count.

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