Natural gas storage report - April

[dan_s]

Working gas in storage was 1,687 Bcf as of Friday, March 29, 2013, according to EIA estimates. This represents a net decline of 94 Bcf from the previous week. Stocks were 779 Bcf less than last year at this time and 37 Bcf below the 5-year average of 1,724 Bcf.

As I predicted, NG storage is now BELOW the 5-year average. This is very bullish for gas.

I now believe storage will move to over 100 bcf BELOW the 5-year average with the next two storage reports. Then I think it will begin to refill, but at a much slower rate than last year. The 5-year average for the week ending April 5 is a build of 26 bcf, therefore if next week's EIA storage report shows a draw over 37 bcf we will be 100 bcf below the 5-year average. Two months ago I thought there was zero chance of this happening.

It may take the market awhile for it to sink in, but NG supply/demand is much tighter than people think. If we have a normal summer, the price of gas should move over $5.00/mmbtu within the next twelve months. All of the companies that had to write down their NG reserves will get to reinstate those reserves at year-end.

[dan_s]

Go to this website and click on Gas Storage in the upper left corner: http://www.americanoilman.com/

[bearcatbob]

Working gas in storage was 1,687 Bcf as of Friday, March 29, 2013, according to EIA estimates. This represents a net decline of 94 Bcf from the previous week. Stocks were 779 Bcf less than last year at this time and 37 Bcf below the 5-year average of 1,724 Bcf.

As I predicted, NG storage is now BELOW the 5-year average. This is very bullish for gas.

I now believe storage will move to over 100 bcf BELOW the 5-year average with the next two storage reports. Then I think it will begin to refill, but at a much slower rate than last year. The 5-year average for the week ending April 5 is a build of 26 bcf, therefore if next week's EIA storage report shows a draw over 37 bcf we will be 100 bcf below the 5-year average. Two months ago I thought there was zero chance of this happening.

It may take the market awhile for it to sink in, but NG supply/demand is much tighter than people think. If we have a normal summer, the price of gas should move over $5.00/mmbtu within the next twelve months. All of the companies that had to write down their NG reserves will get to reinstate those reserves at year-end.

Today is Thursday in NE Ohio. This afternoon was the first this week in the 50s. It was like 25 this morning. I think there will be a draw for this week.

Bob

[dan_s]

NG front month is up 11 cents this morning. I will be talking about the gas market on today's EPG Live Chat.

Send an e-mail to Sabrina (energyprospectus@gmail.com) if you would like to listen in on our Live Chat.

[dan_s]

It looks like Wall Street is waking up to a much tighter natural gas market.

Goldman Sachs (4/8/2013): "We believe Henry Hub natural gas prices will need to rise to $4.50/MMBtu in 2H 2013 to keep gas storage levels near balance and stimulate greater drilling activity in preparation for the beginnings of the demand response to the shale gas transformation in 2014. We raise our 2013 Henry Hub natural gas prices to $4.15/MMBtu from $3.75/MMBtu as we believe a further 200 Bcf demand shift to coal from gas is needed to keep gas storage in balance. We continue to expect $4.25/MMBtu in 2014, the midpoint of a $4.00-$4.50/MMBtu weather-normal range for natural gas we expect through 2018. While gas sentiment has improved, we believe the Street is still not appreciating a continuation of favorable storage trends vs. the 5-year average in 2Q 2013."

My take is that it will take at least $5.00 gas before the E&P shift capital back to drilling for gas.