EIA’s natural gas inventories  

The EIA (U.S. Energy Information Administration) released its weekly US natural gas storage report on August 17, 2017. It reported that US natural gas inventories rose by 53 Bcf (billion cubic feet) to 3,082 Bcf on August 4–11, 2017. Inventories rose 1.7% week-over-week but fell 7.6% or by 254 Bcf year-over-year.

A market survey estimated that inventories would have risen by 47 Bcf on August 4–11, 2017. US natural gas (FCG) (BOIL) (GASL) futures rose on August 17, 2017, despite the better-than-expected rise in US natural gas inventories.

US natural gas prices are near a four-week high. Higher natural gas prices have a positive impact on natural gas producers. The top gainers in the energy sector as of August 17, 2017, are mentioned below:

  • Prime Energy (PNRG) rose 6.1% to 48.
  • Scorpio Tankers (STNG) rose 5.3% to 3.39.
  • Contango Oil & Gas (MCF) rose 5% to 4.83.
  • Energen (EGN) rose 2.3% to 49.18.
  • Kosmos Energy (KOS) rose 2% to 6.75.

US Natural Gas Inventories and Prices Move in the Same Direction

Historical averages

US natural gas inventories rose by 28 Bcf for the week ending August 4, 2017. US natural inventories rose more than the historical averages for the week ending August 11, 2017. They rose by 22 Bcf from the same period in 2016. The five-year average addition is at 50 Bcf for this period of the year.

Impact  

In March 2017, inventories were 21% above their five-year average. Inventories are 1.8% above their five-year average for the week ending August 11, 2017. It indicates that US natural gas inventories are slowing. US natural gas inventories have fallen ~25% from their peak.

The EIA estimates that US natural gas inventories might fall below their five-year average in early 2018. An expectation of a fall in US natural gas inventories could support US natural gas (UNG) (DGAZ) (UGAZ) prices.

In the next part, we’ll discuss how the US natural gas rig count could impact natural gas prices.

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