Natural Gas Storage Report - Sept. 3

[dan_s]

Working gas in storage was 3,164 Bcf as of Friday, September 3, 2010, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 218 Bcf less than last year at this time and 166 Bcf above the 5-year average of 2,998 Bcf.

This is mildly bullish for NG. Storage will hold almost 4 Tcf so there is still plenty of room. The biggest risk for gas is that storage fills before winter demand shows up and you get a period of gas-on-gas competition that really kills the spot market. Doesn't look like that will be an issue this Fall.

NG prices could dip to $3.50 but I see little danger of it falling below that. Look for the price to rebound to over $4.00 by early December.

Raymond James forecasting that NG will average $4.75/mmbtu in 2011. That would push a lot of our favorite gassers a lot higher from here. I've been looking at RRC, HK, XEC, KWK, UPL, ROSE and CRZO for the Sweet-16 in 2011.

Dan