Natural Gas Storage Report - Dec 22

[dan_s]

Working gas in storage was 3,597 Bcf as of Friday, December 16, 2016, according to EIA estimates. This represents a net decline of 209 Bcf from the previous week. Stocks were 226 Bcf less than last year at this time and 78 Bcf above the five-year average of 3,519 Bcf. At 3,597 Bcf, total working gas is within the five-year historical range.

This all but guarantees that the surplus to the 5-year average will be wiped out with next week's storage report. If so, gas in storage falling below the 5-year average is coming a month before I expected it to happen.

The 5-year average draws from storage for the last two weeks of December:
> For the week ending 12/23 = -82 BCF
> For the week ending 12/30 = -127 BCF

The net decline in storage for the week ending 12/23/2016 should be 200 to 250 BCF. If it is at the top of that range, I think ngas prices will push over $4.00 in January. The February NYMEX contract is now trading around $3.60/MMBtu.

[dan_s]

Go to the CME Group website ( http://www.cmegroup.com/trading/energy/ ... l-gas.html ) and you can watch real-time trading of the NYMEX ngas futures. You can see how the speculators play these weekly storage reports.

They buy ahead of the weekly report, which comes out at 10:30 AM ET and close their positions right after the report comes out. What they probably do is tighten up their stop-loss orders right before the report is released. This is why you often see a bit of a pull-back even after a bullish report, like the one we had today. It usually takes only 5-10 minutes before the price stabilizes.

There are a lot of good charts on the CME Group website, so make it one of your favorites.

[dan_s]

Higher natural gas and NGL prices will help all of our model portfolio companies. You can see their production mix at the bottom of each forecast model.