US natural gas inventories
On May 17, the EIA released its weekly natural gas storage report. The EIA reported that US natural gas inventories increased by 106 Bcf (billion cubic feet) to 1,538 Bcf on May 4–11—the largest build in US natural gas inventories for this time of the year since 2015. However, the inventories were lower by 821 Bcf or 34.8% year-over-year.
A Reuters poll estimated that US natural gas inventories could have increased by 105 Bcf on May 4–11.
June US natural gas futures rose 1.6% to $2.86 per MMBtu on May 17. Prices rose due to warm weather forecasts. The United States Natural Gas ETF (UNG) seeks to follow active natural gas futures. UNG rose 1.4% to $23.26 on May 17.
The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of companies mainly involved in natural gas production and exploration. FCG rose 2% to $23.55 on May 17. Williams Partners (WPZ), Vermilion Energy (VET), and SRC Energy (SRCI) account for 5.5% of FCG’s holdings. These stocks rose 8%, 6%, and 5%, respectively, on May 17. These stocks were the top percentage gainers in FCG’s holdings on May 17.
The five-year average change in US natural gas inventories during this period of the year is a build of 87 Bcf. The inventories increased by 64 Bcf during the same period last year. The inventories rose by 89 Bcf on April 27–May 4.
US natural gas inventories were ~25% below their five-year average, which is bullish for natural gas prices. An increase in natural gas inventories towards the five-year average could pressure natural gas prices.
Next, we’ll discuss US natural gas production.