NEW YORK (TheStreet) - U.S. weekly gas in underground storage rose by 107 billion cubic feet (bcf) in the week ending July 11, to a peak of 2,129 bcf not seen since the last week of January, the Energy Information Administrationsaid on Thursday.
The higher-than-expected storage addition pushed natural gas price under $4 per million British thermal units (BTUs) for the first time in 2014.
U.S. largest natural gas producers reacted to the news with sharp declines in their share prices. Exxon Mobil Corp (XOM), the U.S. largest producer of natural gas, closed at $102.31 while Anadarko Petroleum (APC) lost 4% to $108.11 and Chesapeake Energy (CHK) was off 3.7% to $26.82. The United States Natural Gas ETF (UNG) was down 3.5% to $21.87.
The recent fall in prices could continue in the coming weeks as the market cools down. If natural gas continues to drop, this could reduce the revenue of natural gas producers such as Chesapeake Energy as nearly 70% of this company's production comes from natural gas. Lower prices will also slash the company's profit margins in the following quarters.
On the other hand, utility companies such as Exelon (EXC), which uses natural gas in its power stations, will benefit from lower prices: The downward trend in natural gas prices will reduce these companies' operating costs and thus improve their profitability.