EIA - Natural Gas Storage Report - May 19

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

EIA - Natural Gas Storage Report - May 19

Post by dan_s »

Working gas in storage was 1,732 Bcf as of Friday, May 13, 2022, according to EIA estimates.
This represents a net increase of 89 Bcf from the previous week.
Stocks were 358 Bcf less than last year at this time and 310 Bcf below the five-year average of 2,042 Bcf.
At 1,732 Bcf, total working gas is within the five-year historical range.

Things to keep in mind.
> May is the month with the largest storage builds because of adequate storage and mild weather (not to cold and not too hot)
> From mid-April to mid-June we MUST have big storage builds to have any hope of refilling storage before the next winter heating season arrives.
> So far: From April 16 to May 13 (four weeks) the builds have totaled 282 Bcf, which compares to the 5-year average builds of 298 Bcf. The deficit to the 5-year average has grown by 16 Bcf to 310 Bcf.
> Really important to understand: Natural gas does not go into storage just because we have too much. It is sent there by utility companies that are taking physical delivery because they MUST refill their inventories. More "inventory" is needed to meet rising demand for power generation when summer heat arrives and to get ready of the next winter heating season. This means LNG exporters are already in competition for supply with the utilities and the Bidding War will continue all year.

Here are the next six weeks' average builds.
Week ending

> May 20: 101 Bcf < largest build of the year.
> May 27: 99 Bcf
> June 3: 98 Bcf
> June 10: 78 Bcf
> June 17: 86 Bcf
> June 24: 68 Bcf

My guess is that for the six weeks shown above the deficit to the 5-year average will increase because LNG exports are ramping back up to full capacity of 13 Bcf per day and demand for power generation is coming on strong.
By the end of June my "guess" is that storage will be 350 to 400 Bcf below the 5-year average.
Without gas-to-coal full switching for power generation in July & August, we may see draws from storage in Q3; then it will really get interesting. At current coal prices ($412/ton this morning) the gas price must be near $10/MMBtu to make fuel switching economical.
Dan Steffens
Energy Prospectus Group
mikelp
Posts: 200
Joined: Thu Jun 12, 2014 10:15 am

Re: EIA - Natural Gas Storage Report - May 19

Post by mikelp »

Dan,
excellent analysis and very helpful
thanks again
you da man!
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: EIA - Natural Gas Storage Report - May 19

Post by dan_s »

We are going to publish an updated profile on EQT late today. It is the largest producer of natural gas in North America, over 5.5 Bcfe per day.
My current valuation is $59/share, based on HH gas averaging $5.00 in 2023.
If HH gas averages $8.00 in 2023, which is Raymond James new forecast, EQT should generate over $9.5 BILLION ($27/share) of operating cash flow. If so, that could push a reasonable stock valuation to more than $150 per share.

The EQT profile will be posted to the EPG website this afternoon.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: EIA - Natural Gas Storage Report - May 19

Post by dan_s »

Trading Economics
"US natural gas futures consolidated above the $8.4/MMBtu mark, a dramatic turnaround from an early slide to $7.9/MMBtu as investors shrugged off a broader market selloff to focus on the ongoing strengthening of market fundamentals. Prices have been supported by continued robust demand, partly due to Europe's calls for US exports in the wake of Russia's invasion of Ukraine. Additionally, Ukraine has shut down one of its two entry points, further pushing the EU to rely more on US LNG cargoes for its supplies. Domestically, EIA data showed utilities injected 89 bcf into storage last week, mostly in line with expectations but above the 5-year average build of 82 bcf."
Dan Steffens
Energy Prospectus Group
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