Natural Gas Market

[dan_s]

For twelve straight weeks, injections to U.S. natural gas storage have been well below the injections for the same twelve weeks a year ago.

2016 = +1,045 BCF
2017 = +719 BCF

That is a delta of 326 BCF or 31.2% YOY decline. < Note that this difference of 3.9 Bcfpd matches up to what I have been telling you in my weekly podcasts. That U.S. production is down about 2.0 Bcfpd and demand is up about 2.5 Bcfpd. BTW a big part the YOY demand growth is coming in the 2nd half of this year (LNG exports and increasing export to Mexico).

There are 21 weeks remaining before draws from storage for winter heating season begin mid-November.

In 2016 the injections to storage during the remaining 21 weeks was 1,494 BCF.

If 2017 injections to storage are 31.2% lower than last year (1,028 BCF), we will begin the winter heating season with just 3,798 BCF in storage. < This is right at the 5-year average.

Considering how much more gas we consume today than we did five years ago, I think this sets up an under-supplied gas market heading into winter. Keep in mind that we are now exporting over 4 BCF per day more gas than we did five years ago.

To confirm all of the numbers above, go to http://www.americanoilman.com/ and click on "Gas Storage".

[dan_s]

Zacks analyst is starting to get it: https://finance.yahoo.com/news/natural- ... 12728.html

I now think there is a 50/50 chance that we see draws from ngas storage at the end of July and early August. If that happens, it will draw a lot of attention.

If Credit Suisse gas prices forecast ($3.75/MMBtu at Henry Hub in Q3) comes true, all of our "gassers" (AR, EQT, GPOR and RRC) are grossly undervalued.

[dan_s]

June 27: Andy Weissman at EBW anaylitics says the likelihood of increasing early July heat, adding 14 bcf and 30 bcf of projected natural gas demand, helped spur the July NYMEX contract to a 10.8¢/MMBtu gain early this week.

Each year, more areas in the U.S. (especially the South) rely on electricity from gas fired power plants. Last summer we saw the biggest spike in demand for gas in late July that we've ever seen. See slide 11 of my June 22nd podcast (available on the EPG home page).