uploads///NG Inventory

Lower Rise in US Natural Gas Inventories Supports Prices

By

Nov. 20 2020, Updated 1:10 p.m. ET

EIA’s natural gas inventories 

On August 24, 2017, the EIA (U.S. Energy Information Administration) released its US natural gas inventory report. The EIA reported that US natural gas inventories rose by 43 Bcf (billion cubic feet) or 1.4% to 3,125 Bcf on August 11–18, 2017. However, US natural gas inventories have fallen 6.7% or by 223 Bcf from the same period in 2016.

A market survey by S&P Global Platts estimated that inventories would have risen by 46 Bcf on August 11–18, 2017. A less-than-expected rise in US natural gas inventories supported natural gas (DGAZ) (GASL) prices on August 24, 2017. September US natural gas (UGAZ) (UNG) futures contracts rose 0.7% to $2.94 per MMBtu (million British thermal units) on August 24, 2017.

US natural gas prices are near a three-week high. Higher natural gas prices have a positive impact on natural gas stocks. The top gainers in the energy sector as of August 25, 2017, are mentioned below:

  • CARBO Ceramics (CRR) rose 8.3% to $7.02.
  • Scorpio Tankers (STNG) rose 7.3% to $3.9.
  • CGG SA (ADR) (CGG) rose 7.1% to $6.68.
  • Cloud Peak Energy (CLD) rose 6.6% to $3.21.
  • Zion Oil & Gas (ZN) rose 6.1% to $3.29.
Article continues below advertisement

US natural gas inventories by region 

Movements in natural gas inventories for storage on August 11–18, 2017, are as follows:

  • East – rose by 27 Bcf (billion cubic feet) to 728 Bcf
  • Midwest – rose by 23 Bcf to 821 Bcf
  • Mountain – rose by two Bcf to 206 Bcf
  • Pacific – rose by four Bcf to 296 Bcf
  • South Central – fell by 13 Bcf to 1,074 Bcf 

Impact 

US natural gas inventories are 1.5% above their five-year average for the week ending August 18, 2017. They were 21% above their five-year average in March 2017. It suggests that US natural gas inventories are rebalancing towards historical average levels. Inventories are down ~23% from their all-time high.

Some traders think that US natural gas inventories might fall below their five-year average in early 2018. A fall in US natural gas inventories could benefit US natural gas (FCG) (BOIL) prices.

In the next part, we’ll discuss how US natural gas rigs drive natural gas prices.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.