Natural Gas Storage Report - June 30

[dan_s]

Working gas in storage was 3,140 Bcf as of Friday, June 24, 2016, according to EIA estimates. This represents a net increase of 37 Bcf from the previous week. Stocks were 582 Bcf higher than last year at this time and 637 Bcf above the five-year average of 2,503 Bcf. At 3,140 Bcf, total working gas is above the five-year historical range.

This is a VERY BULLISH report. The 5-year average increase in storage for this week is 80 Bcf. The amount of gas in storage is rapidly moving back toward the 5-year average.

Over the last 8 weeks, increases in storage have been 201 Bcf below the 5-year average. See http://www.americanoilman.com/ to confirm for yourself.

My SWAG is that natural gas will move over $3.00 in Q3 and over $3.50 in Q4.

Keep in mind that the natural gas market is nothing like the oil market. Gas is traded on regional markets and for the North American market supply is falling and demand is going up. Per EIA's Drilling Productivity Report, lower 48 natural gas production is now falling by approximately 500 million cubic feet per day month after month. Demand for LNG exports, power generation and industrial demand are expected to increase by 3,000 million cubic feet per day (3 BCF per day) year-over-year in 2016.

I believe we may see at least one week of a draw from storage during July & August. That would send natural gas prices a lot higher. Utilities MUST keep adequate gas in storage to meet consumer demand, so competition for supply will intensify as the winter heating season approaches.

[dan_s]

In December, the January NYMEX contract will be the front month price that is quoted in the news each day. Today it closed at $3.43/mmbtu.

I now think there is a good chance that we see $4.00 natural gas by Christmas. Hard to believe when you recall that gas was selling for $1.70 in February.

[bearcatbob]

IMO all one needs to know is:

"Working gas in storage was 3,140 Bcf as of Friday, June 24, 2016, according to EIA estimates. This represents a net increase of 37 Bcf from the previous week. Stocks were 582 Bcf higher than last year at this time and 637 Bcf above the five-year average of 2,503 Bcf. At 3,140 Bcf, total working gas is above the five-year historical range.

This is a VERY BULLISH report. The 5-year average increase in storage for this week is 80 Bcf. The amount of gas in storage is rapidly moving back toward the 5-year average.
"

[dan_s]

Go to http://www.americanoilman.com/ and click on Gas Storage in the upper left corner.

Make the website one of your Favorites and check it on a regular basis.

[dan_s]

Sanchez Energy (SN) is a company that will get a significant revenue boost from higher natural gas prices. About 1/3rd of their production is natural gas. Another 1/3rd is NGLs. A tighter U.S. natural gas market should also tighten the NGL market.

You can find each company's production mix at the bottom of the forecast models.