Natural Gas Storage Report - Oct 25

[dan_s]

Working gas in storage was 3,095 Bcf as of Friday, October 19, 2018, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week.
Stocks were 606 Bcf less than last year at this time and 624 Bcf below the five-year average of 3,719 Bcf.
At 3,095 Bcf, total working gas is below the five-year historical range.

The odds that winter will begin with storage more than 600 Bcf below the 5-year average are now ~98%.

Over two months ago, I made the guess that U.S. natural gas in storage would be ~3,250 Bcf (600 Bcf below the 5-year average) on November 16, 2018. My "guess" was a Scientific Wild Ass Guess ("SWAG") based primarily on my belief that EIA and just about every other analyst was GROSSLY under-estimating the demand growth for U.S. natural gas and NGLs. I believe EIA is still under-estimating the demand growth for U.S. gas.

U.S. natural gas is the cheapest form of energy on the planet and most people consider it "Clean BTUs".
> Demand for U.S. natural gas is growing at 3X to 5X the rate of demand for oil.
> Two more LNG export facilities are coming on-line early in 2019.
> By the end of 2020 we will have export capacity of ~19 Bcfpd (pipelines and LNG)
> We have replaced many coal fired power plants with natural gas fired power plants. < This will continue.

My forecast of $4.00/MMBtu on the January NYMEX contract by Christmas is a SHORT-TERM forecast. It will take a colder than normal winter that drains storage for gas prices to remain elevated past March, but I do think a normal winter will keep gas prices much higher than the $2.50/MMBtu forecast that most of the Wall Street Gang is expecting in 2019 & 2020. I am using $2.75/mcf in all of my forecast for periods after Q1 2019.

[dan_s]

Over the last 3 months (13 weeks) that delta to the 5-year average is -70 Bcf.

There are only four weeks remaining in the refill season before draw from storage begin. We need to see 155 Bcf added to storage by November 16th to hit my SWAG of 3,250 Bcf when winter begins. With a "NorEaster" hitting New England this weekend, it may be difficult.

[dan_s]

BMO Commodity Markets Report 10-25-2018: "We now have our end of season storage forecast at 3,174 Bcf while ICE markets are expecting 3,203 Bcf, up from 3,192 pre release."

Dr. Bastardi at https://www.weatherbell.com/premium/ now saying that November may be a bit warmer than normal before it turns much colder than normal in December. In my opinion, ending storage are 3,174 to 3,250 Bcf all leads to January NYMEX contract going to over $4.00/mcf if we have a cold December.