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Smaller Rise in US Natural Gas Inventories Helped the Prices

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US natural gas inventories 

On July 26, the EIA (U.S. Energy Information Administration) released its weekly natural gas storage report. The EIA reported that US natural gas inventories increased by 24 Bcf (billion cubic feet) to 2,273 Bcf on July 13–20. However, the inventories fell ~24% from 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 36 Bcf on July 13–20. The smaller-than-expected rise in natural gas inventories supported natural gas prices on July 26.

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August US natural gas futures contracts rose 0.2% to $2.78 per MMBtu (million British thermal units) on July 26. 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 fell 0.13% to $23.6 on July 26.

QEP Resources (QEP), EQT (EQT), Cabot Oil & Gas (COG), and Hess (HES) fell 10.8%, 2%, 1%, and 0.8%, respectively, on July 26. These stocks were some of the top percentage losses in FCG’s holdings on the same day. These stocks account for ~16% of FCG’s holdings.

Historical context 

During this period of the year, the five-year average change in US natural gas inventories is a build of 46 Bcf. The inventories increased by 19 Bcf during the same period in 2017. US natural gas inventories had risen by 46 Bcf on July 6–13.

Impact  

For the week ending July 20, US natural gas inventories were ~19.7% below their five-year average, which is bullish for prices. However, a rise in natural gas inventories towards the five-year average could weigh on natural gas prices.

Next, we’ll discuss US natural gas production.

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