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 events. 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 178 billion cubic feet (Bcf) for the week ended Jan 15, 2016, below the guided range (of 183–187 Bcf draw) as per the analysts surveyed by Platts, the energy information arm of McGraw-Hill Financial Inc. The decrease was also lower than last year’s drop of 220 Bcf for the reported week but was in line with the 5-year (2011–2015) average shrinkage of 177 Bcf. The past week’s decline – the eighth successive withdrawal of the 2015-2016 winter heating season after stocks hit an all-time high in November 2015 – took the current storage level down to 3.297 trillion cubic feet (Tcf). It is still up 629 Bcf (23.6%) from last year and is 473 Bcf (16.7%) above the five-year average. Natural Gas Gains Nevertheless Despite the less-than-expected decrease in storage, gas prices gained 2% for the week to close at $2.141 per MMBtu on Friday. The uptick was driven by predictions of strong demand for the heating fuel due to colder weather forecasts through the end of this month. Prices Still Remain Depressed Natural gas prices are way off the heights reached some years back. From a peak of about $13.50 per MMBtu in 2008 to just over $2 now, the plummeting value of natural gas represents a decline of around 85% over eight years. In fact, it fell to its lowest point in almost 17 years in December. With production from the major shale plays remaining strong and the commodity’s demand failing to keep pace with this supply surge, natural gas prices have been held back. What’s more, industrial requirement has been lackluster over the past few years with demand barely rising. In the past, winter weather has played a factor in boosting prices with demand for domestic natural gas exceeding available supply. But with no dearth of new supply, even this association is becoming more and more obsolete. The price weakness translates into limited upside for natural gas-weighted companies including the likes of Range Resources Corp. RRC, Southwestern Energy Co. SWN, Cabot Oil & Gas Corp. COG, Rice Energy Inc. RICE, Cimarex Energy Co. XEC, Comstock Resources Inc. CRK and Ultra Petroleum Corp. UPL. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SOUTHWESTRN ENE (SWN): Free Stock Analysis Report RANGE RESOURCES (RRC): Free Stock Analysis Report CABOT OIL & GAS (COG): Free Stock Analysis Report COMSTOCK RESOUR (CRK): Free Stock Analysis Report ULTRA PETRO CP (UPL): Free Stock Analysis Report CIMAREX ENERGY (XEC): Free Stock Analysis Report RICE ENERGY INC (RICE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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