The U.S. Energy Department's weekly inventory release showed a
surprise increase in natural gas supplies on account of
warmer-than-normal temperatures across most of the country. The
storage build has also pushed back natural gas stocks above the
ANADARKO PETROL (APC): Free Stock Analysis
CHESAPEAKE ENGY (CHK): Free Stock Analysis
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PATTERSON-UTI (PTEN): Free Stock Analysis
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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
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 like
Anadarko Petroleum Corp.
Devon Energy Corp.
Helmerich & Payne
Analysis of the Data
Stockpiles held in underground storage in the lower 48 states
edged up by 2 billion cubic feet (Bcf) for the week ended
December 7, 2012, contrary to the guided range (of 1-5 Bcf
drawdown) as per the analysts surveyed by Platts, the energy
information arm of
McGraw-Hill Companies Inc.
This bearish and unseasonal weekly storage injection (when stocks
are normally expected to decline), has not only overturned the
slight deficit over the year-ago period but also expanded the
surplus relative to the five-year average benchmark.
As a result of the surprise stock build during the past week, the
current storage level - at 3.806 trillion cubic feet (Tcf) - is
up 48 Bcf (1.3%) from the last year and 283 Bcf (8.0%) over the
A supply glut kept the natural gas prices under pressure during
the past year or so, as production from dense rock formations
(shale) - through novel techniques of horizontal drilling and
hydraulic fracturing - remain robust, thereby overwhelming
In fact, natural gas inventories in underground storage have
persistently exceeded the five-year average since late September
last year and ended the usual summer stock-building season of
April through October at a record 3.923 Tcf (as of October 31,
However, with the upcoming U.S. winter set to be colder than the
unusually warm last one and domestic output likely to drop in
2013 versus 2012 on the back of natural gas players announcing
drilling/volume curtailments, we might expect some balancing of
the commodity's supply/demand disparity.
This, in turn, could improve the prices and buoy natural gas
Ultra Petroleum Corp.
Talisman Energy Inc.
), Encana and Chesapeake.
All the natural gas-associated companies mentioned above are
Zacks #3 Rank (Hold) stocks, implying that these are expected to
perform in line with the broader U.S. equity market over the next
one to three months.