The U.S. Energy Department’s weekly inventory release showed a smaller-than-expected drop in natural gas supplies, attributable to slightly warmer-than-normal weather conditions.
The ‘Weekly Natural Gas Storage Report’ – as reported by the Energy Information Administration (“EIA”) every Thursday since 2002 – includes updates on natural gas market prices, latest storage level estimates, recent weather data, and other market activity or events.
The report provides an overview on the level of reserves and their movements, thereby helping investors to 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. (APC), Chesapeake Energy (CHK), EnCana Corp. (ECA), Devon Energy Corp. (DVN), Nabors Industries (NBR), Patterson-UTI Energy (PTEN), Helmerich & Payne (HP) and Halliburton Co. (HAL).
Stockpiles held in underground storage in the lower 48 states fell by 138 billion cubic feet (Bcf) for the week ended January 7, 2011, just below expectations (of 139–143 Bcf withdrawal) by analysts surveyed by Platts, the energy information arm of McGraw-Hill Companies Inc (MHP).
The latest decline – the ninth in as many weeks – compares with last year’s draw of 255 Bcf and the 5-year (2006–2010) average draw of 108 Bcf for the reported week. The current storage level, at 2.959 trillion cubic feet (Tcf), is up 69 Bcf (2.4%) from last year’s level and remains 161 Bcf (5.8%) above the five-year average.
A supply glut has pressured natural gas futures for much of 2010, as production from dense rock formations (shale) – through novel techniques of horizontal drilling and hydraulic fracturing – remain robust, thereby overwhelming demand. Storage amounts hit a record high of 3.840 Tcf in November, while gas prices during the year fell 21%. However, the recent surge in the commodity’s demand (on account of cold weather) has brought down the 5-year surplus to 5.8%, from almost 10% in November.
ANADARKO PETROL (APC): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
DEVON ENERGY (DVN): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
HELMERICH&PAYNE (HP): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
NABORS IND (NBR): Free Stock Analysis Report
PATTERSON-UTI (PTEN): Free Stock Analysis Report
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