Natural gas futures
US natural gas (UNG) (DGAZ) futures contracts for January delivery rose 1% to $2.62 per MMBtu (million British thermal units) at 1:20 AM EST on December 22, 2017. Prices rose due to short covering. The Energy Select Sector SPDR ETF (XLE) rose 2.1% to 71.8 on December 21, 2017, which is impacted by oil and natural gas prices.
Likewise, the E-Mini S&P 500 (SPY) futures contracts for March delivery rose 0.09% to 2,690.25 at 1:20 AM EST on December 22, 2017.
EIA’s natural gas inventories
On December 21, 2017, the EIA released the US natural gas inventories report. US natural gas inventories fell by 182 Bcf (billion cubic feet) to 3,444 Bcf on December 8–15, 2017, according to the EIA. Inventories fell 5% week-over-week and by 183 Bcf or 5% year-over-year.
A Reuters survey estimated that US natural gas inventories would have fallen by 170 Bcf on December 8–15, 2017. Natural gas (UGAZ) prices fell on December 21, 2017, despite the larger-than-expected withdrawal in US natural gas inventories. For more natural gas price drivers, read Part 1 of this series.
Natural gas (BOIL) futures were near a ten-month low. Moves in natural gas (FCG) prices impact oil and gas producers (IXC) (FXN) like Exco Resources (XCO), Southwestern Energy (SWN), EQT (EQT), and Newfield Exploration (NFX).
US natural gas inventories fell by 200 Bcf during the same week in 2016. The five-year average withdrawal for this period of the year was at 125 Bcf. Inventories also fell by 69 Bcf for the week ending December 8, 2017.
US natural gas inventories were 2.4% below their five-year average for the week ending December 15, 2017. They were 0.7% below their five-year average for the week ending December 8, 2017. Any decrease in US natural gas inventories is bullish for natural gas prices. However, any increase in US natural gas inventories above the five-year average would pressure natural gas (FCG) prices.
Next, we’ll discuss US natural gas rigs.