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US Natural Gas Inventories: Analyzing the Withdrawal This Week

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Natural gas futures 

US natural gas (UNG) (UGAZ) futures contracts for February delivery rose 2.1% to $3.25 per MMBtu (million British thermal units) at 1:30 AM EST on January 22, 2018. Active natural gas futures are near a seven-month high. It favors funds like the Guggenheim S&P Equal Weight Energy (RYE) and the iShares U.S. Energy ETF (IYE). These funds have exposure to US oil and gas companies.

The E-Mini S&P 500 (SPY) futures contracts for March delivery fell 0.12% to 2,807.5 at 1:30 AM EST on January 22, 2018.

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Natural gas inventories estimates 

On January 25, 2018, the EIA will release its US natural gas inventories report. A Reuters poll estimates that US natural gas inventories could have fallen by 249 Bcf (billion cubic feet) on January 12–19, 2018. Inventories fell by 137 Bcf during the same week a year ago. The five-year average natural gas withdrawal for this period of the year was at 164 Bcf.

A larger-than-expected withdrawal in natural gas inventories compared with the historical averages could support natural gas (UNG) prices this week. Higher energy prices favor energy producers (XLE) (IXC) like Gulfport Energy (GPOR), EQT (EQT), and Rex Energy (REXX).

Inventories for the week ended January 12, 2018 

On January 18, 2018, the EIA released its US natural gas inventories report. US natural gas inventories fell by 183 Bcf to 2,584 Bcf on January 5–12, 2018, according to the EIA. A Reuters poll estimated that US natural gas inventories could have fallen by 199 Bcf during the same period. The less-than-expected withdrawal in natural gas inventories pressured gas (GASL) prices on January 18, 2018. They fell 1.3% to $3.18 per MMBtu on January 18, 2018.

Impact

US natural gas inventories have fallen by 1,463 Bcf or 36% since the peak in November 2016. Inventories were also 12.3% below their five-year average. If the momentum continues, it could have a positive impact on natural gas (BOIL) prices. An increase in US natural gas inventories above the five-year average could pressure natural gas (DGAZ) prices.

Next, we’ll discuss US natural gas rigs.

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