Natural Gas Update - April 7

[dan_s]

I just stuck my head outside and it feels like mid winter in Sugar Land, Texas. Granted, "Mid Winter in SL" is 45-50 degrees, but we don't handle cold very well in South Texas.

Looking at the weather forecast for the rest of April (See "Saturday Summary" at https://www.weatherbell.com/premium/ ), it looks like we will have at least two more draws from natural gas storage before the "Shoulder Season" begins and storage refills begin.

On March 30, 2018 natural gas in storage was 697 Bcf below last year.
> In April, 2017 there were four weeks of builds to ngas inventory: +10, +54, +74 and +67 for a total of +205 Bcf
> This year, I doubt we see a +100 Bcf addition to storage in April.

If my prediction above comes true, we will reach the end of April with 800 Bcf less gas in storage than we had at the end of April last year.
That means natural gas demand will be more than 4 Bcfpd higher from May 1 to October 31 this year than it was last year, just to refill storage. Industrial demand, exports and power generation are also higher.

4 Bcfpd is a heck of a lot of gas. I know that EIA keeps telling us that a huge increase in natural gas supply is coming "very soon", but so far it is not showing up in the storage reports. Connecting that much gas to gathering/transportation systems does not happen over-night.

If April remains cold, which is now almost a certainty, and May is warmer than normal (the current forecast), the U.S. natural gas market may be a heck of a lot tighter this summer than EIA is telling everyone. The gas price will not go up until the physical market traders (utilities, industrial users and exporters) start bidding against each other. If that happens, we may see wild spikes in the gas prices. Go here and look at the 20 year chart: http://www.macrotrends.net/2478/natural ... ical-chart

Before each of the big spikes that you see on that chart, traders did not believe that the price of gas would go that high.

[dan_s]

The last time we had a colder than normal winter, the natural gas prices stayed over $4.00 from November, 2013 to November, 2014.
Don't believe me? Go back and look closely at the 20 Yr chart at the link above.