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Lower Rise in US Natural Gas Inventories Boosted 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 May 11, 2017. It reported that US natural gas inventories rose by 45 Bcf (billion cubic feet) to 2,301 Bcf between April 28, 2017, and May 5, 2017. Inventories rose 2% week-over-week, but fell 13.9% YoY (year-over-year). The YoY fall in inventories is bullish for natural gas (DGAZ) (GASL) (UGAZ) prices.

US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016—the highest level ever. Inventories fell ~44.5% from their peak level. 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.

Citigroup estimated that US natural gas inventories would have risen by 62 Bcf between April 28, 2017, and May 5, 2017.

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A less-than-expected rise in natural gas inventories supported natural gas prices on May 11, 2017. The five-year average natural gas addition for this period is 73 Bcf. Inventories rose by 68 Bcf during the same period in 2016. They rose by 67 Bcf in the week ending April 28, 2017. A less-than-expected rise in natural gas inventories compared to historical averages also supported natural gas (UGAZ) (FCG) prices on May 11, 2017.

Higher natural gas prices have a positive impact in oil and gas producers’ profitabilities such as EQT (EQT), EXCO Resources (XCO), Cabot Oil & Gas (COG), and Antero Resources (AR).

What’s the impact? 

For the week ending May 5, 2017, US natural gas inventories were 13.6% higher than their five-year average. They were 21.0% higher than their five-year average in early March 2017. The expectation of 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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