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Decoding US Natural Gas Inventories from June 22 to 29

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US natural gas inventories

On July 6, the EIA (U.S. Energy Information Administration) released its natural gas storage report. The EIA reported that US natural gas inventories had increased by 78 Bcf (billion cubic feet) to 2,152 Bcf from June 22 to 29.

However, inventories were 717 Bcf (or 25%) lower than a year ago. US natural gas inventories were at their lowest level since 2014 for this period of the year.

A Reuters survey estimated that US natural gas inventories could have risen 75 Bcf from June 22 to 29. However, the lowest natural gas inventories for this time of year since 2014 and warmer-than-usual weather forecasts for the next two weeks supported natural gas prices on July 6.

August US natural gas futures contracts rose 0.7% to $2.85 per MMBtu (million British thermal units) on July 6. The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of companies mainly involved in natural gas exploration and production. FCG rose 1.7% to $23.57 on July 6.

SM Energy (SM), QEP Resources (QEP), Gulfport Energy (GPOR), and Matador Resources (MTDR) rose 3.8%, 3.7%, 3.6%, and 3.55%, respectively, on July 6. These stocks were the top percentage gainers in FCG’s holdings on the same day. These stocks account for ~5.6% of FCG’s holdings.

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Historical context 

The five-year average change in US natural gas inventories during this period marked an increase of 70 Bcf. Inventories rose by 60 Bcf during the same period in 2017. US natural gas inventories increased by 66 Bcf from June 15 to 22.

Impact

For the week that ended on June 29, US natural gas inventories were ~18.6% below their five-year average, which is bullish for natural gas prices. However, a rise in natural gas inventories toward the five-year average could weigh on natural gas prices.

Next, we’ll cover US natural gas production.

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