Natural Gas Prices - Dec 23

[dan_s]

Natural gas prices are firming up today for several reasons:

1. Gas in storage is now well below where it was a year ago and the gap will widen rapidly over the next few weeks because the draws from storage were so small last winter.
2. Next week's storage report will push storage below the 5-year average. On 12-31-2016 storage will be more than 100 Bcf below the 5-year average.
3. The forecast for January, after a slightly warmer than normal first few days, now looks colder than normal for the full month.
>>> Watch the 12/23 Update at http://www.weatherbell.com/premium/
>>> Check the Chicago 10-day forecast at https://www.wunderground.com/us/il/chic ... 90.1.99999

Spring like weather over the eastern half of the U.S. on Christmas should disappear by New Years Day.

My weekly podcast will focus on the U.S. natural gas market. I recorded the podcast late on Thursday, but I did something that screwed up the sound so I re-recorded it this morning. Check your e-mail.

Natural gas (and to a lesser extent NGL) prices will flop around with weather forecasts, but the big driver in 2017 will be increasing demand for gas across the full spectrum. UBS recently put out a report forecasting that natural gas demand will increase by 7 Bcf per day over the next two years. Simmons' earlier this year said demand would increase 6.2 Bcfpd during 2017-2018. Current U.S. natural gas production is approximately 76.5 Bcf, so this is a really big deal. A surprising spike in exports to Mexico via pipeline has eliminated the over-supply problem in West Texas.