Natural Gas Supplies Tumble - Analyst Blog
15 Gennaio 2013 - 1:40PM
Zacks
The U.S. Energy Department's weekly inventory release showed a
larger-than-expected decrease in natural gas supplies. Despite this
drawdown, gas stocks continue to remain bloated, reflecting low
demand amid robust onshore output.
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 201 billion cubic feet (Bcf) for the week ended January 4, 2013,
higher than the guided range (of 183–187 Bcf drawdown) as per the
analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc. (MHP).
The decrease represents the seventh withdrawal of the 2012-2013
winter heating season after stocks hit an all-time high in early
November. Moreover, the draw was significantly higher than both the
last year’s withdrawal of 90 Bcf and the five-year (2008–2012)
average reduction of 132 Bcf for the reported week.
As a result of the ‘better-than-expected’ draw during the past
week, the current storage level – at 3.316 trillion cubic feet
(Tcf) – is down 88 Bcf (2.6%) from the last year though it is still
320 Bcf (10.7%) above the five-year average.
In fact, natural gas inventories in underground storage have
persistently exceeded the five-year average since late September
2011 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
couple of years or so, as production from dense rock formations
(shale) – through novel techniques of horizontal drilling and
hydraulic fracturing – remain robust, thereby overwhelming
demand.
However, with the U.S. winter set to be colder than the unusually
warm last one, we might expect 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 like Ultra Petroleum Corp. (UPL),
Talisman Energy Inc. (TLM), Encana and
Chesapeake.
Zacks Rank
Among the natural gas-associated companies mentioned above,
Anadarko Petroleum, Chesapeake Energy, Ultra Petroleum, Encana,
Nabors, Devon Energy, Patterson-UTI Energy and Halliburton are all
Rank #3 (Hold) stocks, implying that these are expected to perform
in line with the broader U.S. equity market over the next one to
three months.
However, Talisman retains a Rank #5 (Strong Sell), while Helmerich
& Payne’s Rank #2 (Buy) implies that the company is likely to
outperform the broader U.S. equity market over the next one to
three months.
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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