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Why Natural Gas Inventories Pressured Natural Gas Prices


Nov. 20 2020, Updated 2:25 p.m. ET

US natural gas inventories 

On May 3, 2018, the EIA released its weekly natural gas storage report. It reported that US natural gas inventories increased by 62 Bcf (billion cubic feet) to 1,343 Bcf between April 20 and April 27. However, inventories declined by 903 Bcf, or 40.2%, year-over-year.

A Reuters poll earlier estimated that US natural gas inventories would increase by 52 Bcf between April 20 and April 27. It was the first inventory build in 2018. The larger-than-expected rise in natural gas inventories pressured natural gas prices on May 3.

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June US natural gas futures fell 1% to $2.72 per MMBtu (million British thermal units) on May 3. The United States Natural Gas ETF (UNG) seeks to follow active natural gas futures. UNG fell 0.7% to $22.3 on May 3. The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of stocks involved in the exploration and production of natural gas. FCG fell 2.6% to $21.4 on May 3.

Natural-gas-weighted stocks Southwestern Energy (SWN), Chesapeake Energy (CHK), and Antero Resources (AR) fell 5.9%, 0.3%, and 3.6%, respectively, on May 3. These stocks have production mixes where natural gas accounts for at least 60% of their overall output portfolio.

Historical context  

The five-year average change in US natural gas inventories during this period of the year is an increase of 69 Bcf. Inventories increased by 68 Bcf during the same period in 2017. US natural gas inventories declined by 18 Bcf between April 13 and April 20.


US natural gas inventories were ~28.4% 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 cover US natural gas production.


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