Natural Gas Storage Report - Sept. 4

[dan_s]

Working gas in storage was 2,709 Bcf as of Friday, August 29, 2014, according to EIA estimates. This represents a net increase of 79 Bcf from the previous week. Stocks were 471 Bcf less than last year at this time and 495 Bcf below the 5-year average of 3,204 Bcf.

The build was 5 bcf higher than what the "experts" were forecasting.

We are still on-track to start the winter heating season with ~300 Bcf less gas in storage than we had last year.

On August 29: The EIA released its August Natural Gas Monthly report, including production data through June as follows:

> Preliminary dry gas production for June 2014 of 2,106 billion cubic feet (Bcf) or 70.2 Bcf/day. This is the fourth consecutive month where the Bcf/day dry gas production value set the record for the highest ever for any month. June’s 70.2 Bcf/day is a slight increase from May’s revised 69.9 Bcf/day.

> Preliminary total consumption for June 2014 was 1,745 Bcf or 58.2 Bcf per day, remaining steady from May. This represents an increase of less than 1% from last June’s 1,732 Bcf or 57.7 Bcf/day, and is the second highest on record for the month. [Keep in mind that May and June are always low consumption months. - Dan]

> Deliveries to residential consumers for June 2014 (125 Bcf or 4.2 Bcf/day) are the second lowest on record for the month; commercial deliveries (140 Bcf or 4.7 Bcf/day) are the highest for June since 2002; industrial deliveries (586 Bcf or 19.5 Bcf/day) are also the highest for the month since 2002; and electric power deliveries for June (719 Bcf or 24.0 Bcf/day) are down 2% from June 2013. [Lower demand for power generation has been the big story this summer as we have had a rather mild summer. - Dan]

The EIA further commented, “This is the fourth consecutive month where the Bcf/day dry gas production value set the record for the highest ever for any month.”

My take: There is a lot of associated gas coming on-line and we have plenty of natural gas reserves. Short-term the price of gas should hold up just because we will approach the winter heating season with a lot less gas in storage. A very cold winter - which is the current forecast - could cause some regional supply issues, but the outlook for next summer is not good for natural gas prices. In 2016 LNG export facilities and a lot more industrial demand come on-line, which should help stabilize gas prices . KEEP YOUR PORTFOLIOS HEAVILY WEIGHTED TO OIL.