... because it is HOT in Texas and getting hotter.
U.S. Natural Gas Storage Recap from Tudor Pickering Holt (TPH)
Inventory deficit closes ~2% w/w, but warm weather outlook constructive for pricing.
Sector: Macro | Ticker: HHUB | Recommendation: NR | Target: Close | Close: $2.85/mcf
"106bcf injection in-line with expectations (105bcf). This week's 45 TDD was significantly lower than the 5-yr norm, 64 TDD....indicating that the market remains oversupplied on a weather-adjusted basis. Warmer-than-normal temperatures continue to be expected across the lower US as CDD likely overtakes HDD. If proven accurate, warm weather will become a boon for pricing as we enter the summer cooling season. Nationally, US dry production failed to break past the 80bcfd barrier, Mexican exports remain at ~4.3bcfd, and LNG exports were flat w/w at ~3.4bcfd. 2018's natural gas inventories now ~25% lower than 5-yr norms."
This year we have a shorter than normal refill season and the U.S. natural gas storage level is 25% lower than the 5-year average for this time of year. As the summer heat spreads, so does natural gas demand for power generation. If storage is 300 Bcf below the 5-year average heading into July (~99% probability) then my SWAG is that ngas price at HH goes over $3.00/MMBtu.
On May 11 storage was 501 Bcf below the 5-year average.
Why is natural gas at $2.85/MMBtu
Why is natural gas at $2.85/MMBtu
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Why is natural gas at $2.85/MMBtu
What does TDD CDD and HDD mean?
Re: Why is natural gas at $2.85/MMBtu
CDD = Cooling Degree Days
HDD = Heating Degree Days
TDD = Total Degree Days
See: http://www.celsiusenergy.net/p/intraday-weather.html < Click on the Natural Gas Main tab
At this time of year the TDD is usually quite low, which leads to big builds in storage. What is finally getting noticed is the fact that it will be difficult, if not impossible, to get storage back to the 5-year average before the next winter heating season arrives. Only an extremely mild summer will allow storage to rebuild to adequate safe level by the end of October.
It is the utility companies bidding against each other for supply in the physical market which causes big spikes in the gas price.
HDD = Heating Degree Days
TDD = Total Degree Days
See: http://www.celsiusenergy.net/p/intraday-weather.html < Click on the Natural Gas Main tab
At this time of year the TDD is usually quite low, which leads to big builds in storage. What is finally getting noticed is the fact that it will be difficult, if not impossible, to get storage back to the 5-year average before the next winter heating season arrives. Only an extremely mild summer will allow storage to rebuild to adequate safe level by the end of October.
It is the utility companies bidding against each other for supply in the physical market which causes big spikes in the gas price.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group