EiA - Weekly Natural Gas Storage Report - Aug 29

[dan_s]

I'm late on posting this because Susan & I just got back from our visit to Dallas.

Working gas in storage was 2,857 Bcf as of Friday, August 23, 2019, according to EIA estimates. This represents a net increase of 60 Bcf from the previous week.
Stocks were 363 Bcf higher than last year at this time and 100 Bcf below the five-year average of 2,957 Bcf.
At 2,857 Bcf, total working gas is within the five-year historical range.

There are 12 more weeks left in the "Refill Season", which should end on November 15th. IMO it is VERY IMPORTANT that gas in storage stays below the 5-year average. If so, the price should stay over $2.25 and be "OK" through a normal winter. It will take a very cold start to winter to push gas over $3.00. My forecast/valuation models assume an average gas price of $2.30 in 2020. This is the average price at Henry Hub, Louisiana. Gas prices in the Permian Basin will be much lower because of the lack of pipeline takeaway capacity. Henry Hub is where the NYMEX futures contracts are settled.

The 5-year average is 3,732 Bcf in storage mid-November, so we have plenty of room left in storage. The U.S. actually has approximately 4,300 Bcf in storage space, but it never "fills up". In November, 2016 gas in storage reached 4,047 Bcf and the HH gas price dipped to $2.37 but rebounded to more than $3.70 thanks to a very cold December.

Remember, natural gas prices are set on regional markets.