Season's First Natural Gas Drawdown - Analyst Blog
19 Novembre 2012 - 1:15PM
Zacks
The U.S. Energy Department's weekly
inventory release showed a larger-than-expected decrease in natural
gas supplies on account of the advent of cold weather that
prompted the commodity’s brisk use for space heating by
residential/commercial consumers. The storage withdrawal – the
first for the winter heating season – has also cut the surplus
relative to the 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
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 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 Company (HAL).
Analysis of the Data
Stockpiles held in underground storage in the lower 48 states fell
by 18 billion cubic feet (Bcf) for the week ended November 9, 2012,
higher than the guided range (of 10–14 Bcf gain) as per the
analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc. (MHP).
The decrease represents the first withdrawal of the 2012-2013
winter heating season after stocks hit an all-time high in the
previous week. More importantly, during this time last year and
over the five-year (2007–2011) period, natural gas was still being
added into supplies at the respective rates of 20 Bcf and 17 Bcf.
Therefore, the weekly storage draw has trimmed the surplus relative
to the benchmarks.
But in spite of the ‘better-than-expected’ draw during the past
week, the current storage level – at 3.911 trillion cubic feet
(Tcf) – is up 71 Bcf (1.8%) from the last year and 209 Bcf (5.6%)
over the five-year average.
In fact, natural gas inventories in underground storage have
persistently exceeded the five-year average since late September
last year and ended the usual summer stock-building season of April
through October at a record 3.923 Tcf (as of October 31, 2012).
A supply glut kept the natural gas prices under pressure during the
past year or so, as production from dense rock formations (shale) –
through novel techniques of horizontal drilling and hydraulic
fracturing – remains robust, thereby overwhelming demand.
However, with the upcoming U.S. winter set to be colder than the
unusually warm last one and domestic output likely to drop in 2013
versus 2012 on the back of natural gas players announcing
drilling/volume curtailments, we might expect some balancing of the
commodity’s supply/demand disparity.
This, in turn, could improve the prices and buoy natural gas
producers like Ultra Petroleum Corp. (UPL),
Talisman Energy Inc. (TLM) Encana and
Chesapeake.
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
TALISMAN ENERGY (TLM): Free Stock Analysis Report
ULTRA PETRO CP (UPL): Free Stock Analysis Report
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