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Will US Natural Gas Inventories Help Natural Gas Futures?

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Oct. 27 2017, Published 10:37 a.m. ET

EIA’s natural gas inventories 

The EIA (or US Energy Information Administration) published its weekly US natural gas inventory report on October 26, 2017. It estimates that US natural gas inventories rose by 64 Bcf (billion cubic feet), or 1.7%, to 3,710 Bcf between October 13, 2017, and October 20, 2017. However, inventories are down 4.8% or by 189 Bcf year-over-year.

Wall Street analysts expected that US natural gas inventories would rise 65 Bcf between October 13, 2017, and October 20, 2017. Natural gas (UGAZ) (FCG) prices fell on October 26, 2017, despite the less-than-expected seasonal rise in natural gas inventories.

US natural gas (DGAZ) (GASL) prices are near four-week lows. Changes in natural gas prices impact natural gas producers (FENY)(IEO) like Rex Energy (REXX), Cabot Oil & Gas (COG), and Exco Resources (XCO).

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Natural gas inventories by region

Moves in US gas inventories for the storage regions between October 13, 2017, and October 20, 2017, are as follows:

  • East: rose by 13 Bcf (billion cubic feet) to 915 Bcf
  • Midwest: rose by 28 Bcf to 1,082 Bcf
  • Mountain: flat at 224 Bcf
  • Pacific: fell by one Bcf to 315 Bcf
  • South Central: rose by 24 Bcf to 1,174 Bcf 

Impact

For the week ending October 20, 2017, US natural gas inventories are below their five-year average by 1.2%. They were 21% above their five-year average in March 2017. Inventories are rebalancing towards the historical averages. The EIA predicts that natural gas inventories are expected to fall 4.2% below the five-year average in the next three months, which would support US natural gas (UNG) (GASL) prices.

Next, we’ll analyze how US oil and gas rigs impact natural gas prices.

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