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Natural Gas Inventories: Almost 7% Higher than the 5-Year Average

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EIA’s natural gas inventories  

The EIA (U.S. Energy Information Administration) released its natural gas storage report on June 29, 2017. It reported that US natural gas inventories rose by 46 Bcf (billion cubic feet) to 2,816 Bcf on June 16–23, 2017. Inventories rose 1.6% week-over-week but fell 10.2% year-over-year.

A market survey estimated that inventories would have risen by 52 Bcf on June 16–23, 2017. US natural gas (UGAZ) (BOIL) (UNG) prices rose after the inventory report was released at 10:30 AM EST on June 29, 2017, due to a less-than-expected rise in inventories. However, prices settled lower at the close of trade on June 29, 2017. For more on natural gas prices, read the previous part of the series.

The rollercoaster ride in natural gas prices impacts natural gas producer’s earnings like Gulfport Energy (GPOR), Rice Energy (RICE), Newfield Exploration (NFX), and Memorial Resources (MRD).

The five-year average natural gas addition for this period is at 72 Bcf (billion cubic feet). Inventories rose by 41 Bcf for the same period in 2016. US natural gas inventories rose by 61 Bcf for the week ending June 16, 2017. 

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Impact  

US natural gas inventories hit 4,047 Bcf for the week ending November 11, 2016—the highest level ever. Inventories have fallen 43% from the peak level. Inventories are 6.9% above their five-year average for the week ending June 23, 2017. In March 2017, inventories were 21.0% higher than the five-year average, which suggests that inventories are slowing.

The expectation of fall in US natural gas inventories in 2017 could benefit natural gas prices. A warm summer could help remove excess inventories. It would also help natural gas prices.

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

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