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US Natural Gas Inventories: Largest Weekly Withdrawal since 2014

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Natural gas futures 

NYMEX natural gas futures contracts for March delivery fell 0.9% from the previous settlement and were trading at $2.55 per MMBtu (million British thermal units) at 1:00 AM EST on February 16, 2018. Prices fell due to mild weather forecasts.

Natural gas prices fell 0.3% on February 15, 2018. The Guggenheim S&P Equal Weight Energy ETF (RYE) and the iShares Global Energy ETF (IXC) fell 0.6% and 0.03%, respectively, on February 15, 2018. These ETFs have exposure to US oil and gas companies.

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Natural gas inventories  

The EIA released its weekly US natural gas inventories report on February 15, 2018. US natural gas inventories declined by 194 Bcf (billion cubic feet) to 1,884 Bcf on February 2–9, 2018, according to the EIA. The report contained the largest weekly withdrawal for natural gas inventories for this time of the year since 2014. The inventories also declined by 577 Bcf or 23.4% from a year ago.

A Reuters poll estimated that US natural gas inventories could have declined by 183 Bcf on February 2–9, 2018. The larger-than-expected withdrawal in natural gas inventories limited the downside for natural gas prices on February 15, 2018. US natural gas prices fell 0.27% to $2.58 per MMBtu on February 15, 2018.

The ProShares Ultra Bloomberg Natural Gas (BOIL) fell 1.1% to 5.2 on February 15, 2018, while the First Trust ISE-Revere Natural Gas ETF (FCG) rose 0.05% to 20.81 on the same day.

Historical context  

US natural gas inventories declined by 120 Bcf during the same week in 2017. The five-year average US natural gas withdrawal for this period of the year was at 154 Bcf. Inventories fell by 119 Bcf between January 26, 2018, and February 2, 2018.

Impact  

US natural gas inventories have declined by 2,163 Bcf or 53.4% since the record high on November 11, 2016. Inventories were also 18.7% below their five-year average, which is bullish for natural gas prices.

However, a rise in US natural gas inventories above the five-year average could pressure US natural gas prices.

Next, we’ll discuss the US natural gas rig count.

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