US natural gas inventories
On May 10, the EIA released its natural gas storage report. The EIA reported that US natural gas inventories increased by 89 Bcf (billion cubic feet) to 1,432 Bcf on April 27–May 4. However, the inventories dropped by 863 Bcf or 38% from a year ago.
A Reuters poll estimated that US natural gas inventories could have increased by 91 Bcf on April 27–May 4. The less-than-expected build in natural gas inventories supported natural gas prices on May 10.
June US natural gas futures rose 2.8% to $2.81 per MMBtu (million British thermal units) on May 10. The United States Natural Gas ETF (UNG) seeks to follow active natural gas futures. UNG rose 2.6% to $22.9 on May 10.
The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of companies involved in natural gas production and exploration. FCG rose 0.2% to $22.8 on May 10. Anadarko Petroleum (APC), Devon Energy (DVN), and Continental Resources (CLR) rose 1.4%, 1.7%, and 0.2%, respectively, on May 10. These stocks account for 16% of FCG’s holdings.
The five-year average change in US natural gas inventories during this period of the year is a build of 75 Bcf. The inventories increased by 49 Bcf during the same period in 2017. The inventories rose by 62 Bcf on April 20–27—the first build in US natural gas inventories in 2018.
US natural gas inventories were ~27% below their five-year average, which is bullish for natural gas prices. An increase in natural gas inventories towards the five-year average could weigh on natural gas prices.
Next, we’ll discuss US natural gas production.