Natural Gas Storage Report, April 25

[dan_s]

Working gas in storage was 1,734 Bcf as of Friday, April 19, 2013, according to EIA estimates. This represents a net increase of 30 Bcf from the previous week. Stocks were 807 Bcf less than last year at this time and 94 Bcf below the 5-year average of 1,828 Bcf.

Storage will be more than 100 bcf below 5-yr average next week.

[setliff]

rig count for ng dropped again this week by 13 rigs. robry (a guy with loads of data and famous for his tracking ng usage, production, prediction for weekly ng data, etc) posts on the bry IV board. he has gone on record a while back that we would be 300 rigs short by nov to maintain winter supplies(assuming count doesn't go up by then). count has dropped more since then.

this, imo, means price will start to accelerate faster when the mkt realizes the bind we might be in. as seen in the past natty can go waaay up in a hurry--remember those $15 prices just before the barnett started kicking in?

[dan_s]

My "official" forecast is that we will see NG trading above $5.00/mmbtu by year-end. My real view is that the price could be much higher by Thanksgiving. I now believe the storage gap to the 5-year average will continue to widen, drawing a lot of buyers on NYMEX. GS will be pounding the table to buy NG futures.

It is very important to remember that the U.S. gas market is almost a closed market. We have very little ability to import gas to meet spikes in demand. Since demand is now 26-27 TCF per year, demand can exceed supply quickly. The EIA has already reported that demand the last twelve months exceeded supply. AND supply is falling!

Take a look at the ten year chart for NG prices and you will see three times that gas prices have exceeded the 6:1 ratio. I doubt we see that again, but 10:1 is quite possible if we get a hot summer followed by a cold start to next winter. Also, any hurricane season shut downs of the Gulf Coast gas will push NG futures way up.