The U.S. Energy Department's weekly inventory release showed a
smaller-than-expected increase in natural gas supplies, reflecting
the commodity's brisk use for space heating by
residential/commercial consumers amid essentially flat
Despite the relatively soft (and below estimate) supply build, the
latest injection has added to already bloated inventories. Gas
stocks - currently some 7% above the benchmark average levels - are
at their highest point for this time of the year, reflecting low
demand amid robust onshore output.
While natural gas inventories are no doubt still at elevated
levels, the most recent injection - significantly lower than the
average for this time - has cut the surplus relative to last year
and the five-year average.
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
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
Anadarko Petroleum Corporation
Devon Energy Corporation
Helmerich & Payne
Analysis of the Data
Stockpiles held in underground storage in the lower 48 states rose
by 72 billion cubic feet (Bcf) for the week ended October 5, 2012,
lower than the guided range (of 76-80 Bcf gain) as per the analysts
surveyed by Platts - the energy information arm of
McGraw-Hill Companies Inc.
The increase was also lower than both the last year's build of 108
Bcf and the five-year (2007-2011) average addition of 84 Bcf for
the reported week, thereby trimming the surplus relative to the
But in spite of the 'below-average' build during the past week, the
current storage level - at 3.725 trillion cubic feet (Tcf) - is up
236 Bcf (6.8%) from the last year and 269 Bcf (7.8%) over the
In fact, natural gas inventories in underground storage have
persistently exceeded the five-year average since late September
last year and are likely to test the nation's underground storage
facilities by fall. In fact, the EIA foresees natural gas storage
at record highs of around 4.0 Tcf by October end.
A supply glut has pressured natural gas prices 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 demand.
ANADARKO PETROL (APC): Free Stock Analysis
CHESAPEAKE ENGY (CHK): Free Stock Analysis
DEVON ENERGY (DVN): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
NABORS IND (NBR): Free Stock Analysis Report
PATTERSON-UTI (PTEN): Free Stock Analysis
To read this article on Zacks.com click here.