US natural gas inventories
On July 19, the EIA (U.S. Energy Information Administration) released its weekly natural gas storage report. The EIA reported that US natural gas inventories increased by 46 Bcf (billion cubic feet) to 2,249 Bcf on July 6–13. However, the inventories rose by 710 Bcf— 24% lower than a year ago. The inventories were at the lowest level since 2014 for this time of the year.
A Reuters survey estimated that US natural gas inventories could have risen by 57 Bcf on July 6–13. The smaller-than-expected build in natural gas inventories, the lowest natural gas inventories for this time of the year since 2014, and warmer-than-usual weather forecasts until early August supported natural gas prices on July 19.
August US natural gas futures contracts rose 1.8% to $2.77 per MMBtu (million British thermal units) on July 19. 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 1.2% to $23.61 on July 19.
Enbridge Energy (EEP), Spectra Energy (SEP), NuStar Energy (NS), and Southwestern Energy (SWN) rose 6.9%, 5.4%, 4.1%, and 3.5%, respectively, on July 19. These stocks were the top percentage gainers in FCG’s holdings on the same day. These stocks account for ~5.2% of FCG’s holdings.
The five-year average change in US natural gas inventories during this period of the year is a build of 62 Bcf. The inventories increased by 31 Bcf during the same period in 2017. US natural gas inventories increased by 51 Bcf on June 29–July 6.
For the week ending July 13, US natural gas inventories were ~19.2% below their five-year average, which is bullish for natural gas prices. However, a rise in natural gas inventories towards the five-year average could pressure natural gas prices.
Next, we’ll discuss US natural gas production.