Unexpected Rise in US Natural Gas Inventories

EIA’s natural gas inventory report 

The EIA published its weekly natural gas inventory report on December 7, 2017. It estimated that US natural gas inventories rose by 2 Bcf (billion cubic feet) to 3,695 Bcf on November 24–December 1, 2017. However, inventories fell by 264 Bcf or 6.7% from the same period in 2016.

A Reuters poll estimated that US natural gas inventories would have fallen by 7 Bcf on November 24–December 1, 2017. An unexpected build in natural gas inventories weighed on US natural gas (FCG) (UNG) (UGAZ) prices on December 7, 2017. It’s the biggest weekly rise in US natural gas inventories for this period of the year since 2001. For more on natural gas prices, read Part 1 of this series.

Unexpected Rise in US Natural Gas Inventories

US natural gas (DGAZ) (UGAZ) futures fell 16% in the last three months. They’re also near a two-month low. Lower natural gas (UNG) prices have a negative impact on energy producers (FXN) (IXC) like WPX Energy (WPX), ExxonMobil (XOM), Antero Resources (AR), and Cabot Oil & Gas (COG).

Natural gas inventories by US regions 

Moves in US natural gas inventories for the storage regions on November 24–December 1, 2017, are mentioned below:

  • East fell by 8 Bcf to 868 Bcf
  • Midwest fell by 10 Bcf to 1,058 Bcf
  • Mountain was flat at 221 Bcf
  • Pacific fell by 1 Bcf to 313 Bcf
  • South Central rose by 21 Bcf to 1,235 Bcf

Impact 

US natural gas inventories were 3.1% below their five-year average for the week ending November 17, 2017. They’re 1% below their five-year average for the week ending December 1, 2017. Any rise in US natural gas inventories above their five-year average would pressure natural gas (UNG) (FCG) prices.

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