We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The U.S. Energy Department's weekly inventory release showed a larger-than-expected decrease in natural gas supplies though the withdrawal was way below average as mild weather conditions restricted heating demand.
About the Weekly Natural Gas Storage Report
The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.
Analysis of the Data: An Above-Average Draw
Stockpiles held in underground storage in the lower 48 states fell by 68 billion cubic feet (Bcf) for the week ended Mar 3, 2017, above the guidance (of 58 Bcf draw) as per the analysts surveyed by S&P Global Platts, a leading independent commodities and energy data provider. The past week’s decline represents the fifteenth withdrawal of the 2016-2017 winter heating season after stocks hit an all-time high in November.
Following the latest draw, the current storage level – at 2.295 trillion cubic feet (Tcf) – is down 192 Bcf (7.7%) from last year but is 363 Bcf (18.8%) above the five-year average.
A bout of unseasonably mild weather meant that the decrease lagged the 5-year (2012–2016) average shrinkage of 136 Bcf for the reported week but was ahead of last year’s drop of 63 Bcf.
Positive Long-Term Thesis
Heating demand in winter season – which runs from Nov 1 to Mar 31 – is the single most important contributor of natural gas consumption during these months. Therefore, with the latest weather update pointing to below-normal temperatures over the next few days, heating degree days (HDD) will likely improve and drive storage draws. Following this bullish weather outlook, natural gas prices have moved closer to the key psychological level of $3 per MMBtu.
Moreover, long-term fundamentals for the commodity continue to be bullish on the back of structural imbalances. While domestic natural gas production is expected to rebound this year, the growing use of liquefied natural gas (or LNG), booming exports to Mexico, replacing coal-fired power plants and higher demand from industrial projects will likely take care of the increased output. The resulting effect will ensure natural gas storage keeping pace with the 5-year average in the near future, with deficits piling up later on.
By the onset of summer months, these secular headwinds will start to have a positive impact on natural gas sentiment and price.
The perceived price strength augurs well for natural gas drillers like Rice Energy Inc. , Chesapeake Energy Corp. , Southwestern Energy Co. , Antero Resources Corp. (AR - Free Report) , Cabot Oil & Gas Corp. and EQT Corp. (EQT - Free Report) .
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
EIA Reports Larger-than-Expected Natural Gas Draw
The U.S. Energy Department's weekly inventory release showed a larger-than-expected decrease in natural gas supplies though the withdrawal was way below average as mild weather conditions restricted heating demand.
About the Weekly Natural Gas Storage Report
The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.
Analysis of the Data: An Above-Average Draw
Stockpiles held in underground storage in the lower 48 states fell by 68 billion cubic feet (Bcf) for the week ended Mar 3, 2017, above the guidance (of 58 Bcf draw) as per the analysts surveyed by S&P Global Platts, a leading independent commodities and energy data provider. The past week’s decline represents the fifteenth withdrawal of the 2016-2017 winter heating season after stocks hit an all-time high in November.
Following the latest draw, the current storage level – at 2.295 trillion cubic feet (Tcf) – is down 192 Bcf (7.7%) from last year but is 363 Bcf (18.8%) above the five-year average.
A bout of unseasonably mild weather meant that the decrease lagged the 5-year (2012–2016) average shrinkage of 136 Bcf for the reported week but was ahead of last year’s drop of 63 Bcf.
Positive Long-Term Thesis
Heating demand in winter season – which runs from Nov 1 to Mar 31 – is the single most important contributor of natural gas consumption during these months. Therefore, with the latest weather update pointing to below-normal temperatures over the next few days, heating degree days (HDD) will likely improve and drive storage draws. Following this bullish weather outlook, natural gas prices have moved closer to the key psychological level of $3 per MMBtu.
Moreover, long-term fundamentals for the commodity continue to be bullish on the back of structural imbalances. While domestic natural gas production is expected to rebound this year, the growing use of liquefied natural gas (or LNG), booming exports to Mexico, replacing coal-fired power plants and higher demand from industrial projects will likely take care of the increased output. The resulting effect will ensure natural gas storage keeping pace with the 5-year average in the near future, with deficits piling up later on.
By the onset of summer months, these secular headwinds will start to have a positive impact on natural gas sentiment and price.
The perceived price strength augurs well for natural gas drillers like Rice Energy Inc. , Chesapeake Energy Corp. , Southwestern Energy Co. , Antero Resources Corp. (AR - Free Report) , Cabot Oil & Gas Corp. and EQT Corp. (EQT - Free Report) .
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>