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US Natural Gas Inventories Declined

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US natural gas inventories  

The EIA released its weekly US natural gas inventories report on March 8, 2018. US natural gas inventories fell by 57 Bcf (billion cubic feet) to 1,625 Bcf on February 23–March 2, 2018, according to the EIA. The inventories also declined by 680 Bcf or 29.5% from a year ago.

A Reuters poll estimated that US natural gas inventories could have declined by 58 Bcf on February 23–March 8, 2018. Natural gas inventories fell in-line with the market expectation.

US natural gas prices fell 0.8% to $2.75 per MMBtu (million British thermal units) on March 8, 2018. The iShares US Energy ETF (IYE) fell 0.1% to 36.8 on March 8, 2018, while the iShares Global Energy ETF (IXC) fell 0.2% to 33.46 on the same day. IYE and IXC have exposure to US energy companies.

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Historical context 

The five-year average withdrawal in US natural gas inventories at this time of the year was at 129 Bcf. Natural gas inventories declined by 57 Bcf during the same week in 2017. The inventories also declined by 78 Bcf on February 16–23, 2018.

Impact 

US natural gas inventories were 15.6% below their five-year average, which is bullish for natural gas prices. The EIA estimates that US natural gas inventories could reach ~1,481 Bcf by the end of March 2018—14% lower than the five-year average.

An increase in US natural gas inventories towards the five-year average could pressure US natural gas prices.

Next, we’ll discuss US natural gas production.

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