The U.S. Energy Department's weekly inventory release showed a
smaller-than-expected decrease in natural gas supplies, as
healthy improvement in demand was partially offset by a slight
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 62 billion cubic feet (Bcf) for the week ended Mar 15,
2013, lower than the guided range (of 67-71 Bcf drawdown) as per
the analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc.
The decrease represents the 17th withdrawal of the 2012-2013
winter heating season after stocks hit an all-time high in early
November last year. Moreover, the draw was significantly higher
than both the last year's withdrawal of zero and the five-year
(2008-2012) average reduction of 26 Bcf for the reported week.
Following the past week's reduction, the current storage level -
at 1.876 trillion cubic feet (Tcf) - is down 502 Bcf (21.1%) from
the last year but is still 162 Bcf (9.5%) above the five-year
In fact, natural gas inventories in underground storage have
persistently exceeded the five-year average since late Sep 2011
and ended the usual summer stock-building season of April through
October at a record 3.923 Tcf (as of Oct 31, 2012).
A supply glut kept the natural gas prices under pressure during
the couple of years or so, as production from dense rock
formations (shale) - through novel techniques of horizontal
drilling and hydraulic fracturing - remain robust, thereby
However, with the U.S. winter colder than the unusually warm last
one, we are experiencing some balancing of the commodity's
supply/demand disparity on the back of its more normalized use
for space heating by residential/commercial consumers.
This, in turn, could improve the prices and 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 can then move higher from their
current Zacks Rank #3 (Hold).
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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