The U.S. Energy Department's weekly inventory release showed a
decrease in natural gas supplies on account of cold temperatures
that spurred the commodity's demand for heating. The storage
withdrawal has also pushed down natural gas stocks below the
five-year average level for the first time since September 2011.
BILL BARRETT CP (BBG): Free Stock Analysis
FOREST OIL CORP (FST): Free Stock Analysis
LINN ENERGY LLC (LINE): Free Stock Analysis
MCGRAW-HILL COS (MHP): 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.
Analysis of the Data
Stockpiles held in underground storage in the lower 48 states
fell by 94 billion cubic feet (Bcf) for the week ended Mar 29,
2013, at the upper end of the guided range (of 90-94 Bcf
drawdown) as per the analysts surveyed by Platts, the energy
information arm of
McGraw-Hill Companies Inc.
The decrease represents the 19th withdrawal of the 2012-2013
winter heating season after stocks hit an all-time high in early
November last year. Moreover, the draw - the largest for this
time of the year since EIA started collecting weekly storage data
in 2002 - was in contrast to last year's injection of 43 Bcf and
the five-year (2008-2012) average addition of 4 Bcf for the
Following the past week's reduction, the current storage level -
at 1.687 trillion cubic feet (Tcf) - is down 779 Bcf (31.6%) from
the last year. More importantly, the latest weekly draw has
overturned the excess stock over the five-year average, with the
current storage being 37 Bcf (2.1%) below the benchmark. In fact,
natural gas inventories in underground storage have gone under
the five-year average for the first time since late September
In recent times, cold winter weather across most parts of the
country has boosted natural gas demand for space heating by
residential/commercial consumers. This, coupled with flat
production volumes, means that the inventory overhang is now
gone, thereby driving commodity prices to its 18-month high of
$4.12 per million Btu (MMBtu) (referring to spot prices at the
Henry Hub, the benchmark supply point in Louisiana).
This, in turn, is expected to buoy natural gas producers,
particularly smaller players like
Bill Barrett Corp.
Linn Energy LLC
Forest Oil Corp.
). With an improvement in the companies' ability to generate
positive earnings surprises, they are likely to move higher from
their current Zacks Rank #3 (Hold).