US natural gas inventories
On June 7, the EIA (U.S. Energy Information Administration) released its natural gas storage report. It reported that US natural gas inventories rose 92 Bcf (billion cubic feet) to 1,817 Bcf from May 25 to June 1. However, inventories were 799 Bcf, or 30.5%, lower than a year ago. Inventories are at their lowest level since 2014 for this time of the year.
A Reuters survey estimated earlier that US natural gas inventories would rise 90 Bcf from May 25 to June 1. The five-year average change in US natural gas inventories during this time of the year is an increase of 104 Bcf. Inventories increased 103 Bcf during the same period in 2017. US natural gas inventories increased 96 Bcf from May 18 to 25.
The smaller build in natural gas inventories compared with historical averages supported natural gas prices on June 7. July US natural gas futures contracts rose 1.2% to $2.93 per MMBtu (million British thermal unit) on June 7. 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 2.1% to $22.70 on June 7.
Ultra Petroleum (UPL), SM Energy (SM), QEP Resources (QEP), and Unit (UNT) account for 8.5% of FCG’s holdings. These stocks rose 8.3%, 6.7%, 4.1%, and 4.1%, respectively, on June 7. They were the top percentage gainers in FCG’s holdings that day.
US natural gas inventories were ~22% below their five-year average, which has a positive impact on natural gas prices. However, a rise in natural gas inventories toward the five-year average could weigh on natural gas prices.
Next, we’ll look at US natural gas production.