Natural Gas Storage Report - Dec 12

[dan_s]

Working gas in storage was 3,533 Bcf as of Friday, December 6, 2013, according to EIA estimates. This represents a net decline of 81 Bcf from the previous week. Stocks were 273 Bcf less than last year at this time and 109 Bcf below the 5-year average of 3,642 Bcf.

With BIG DRAWS expected the next two weeks, we could see storage levels more than 500 bcf less than last year by year-end.

If storage dips below 3,000 bcf by year-end that would be VERY BULLISH for natural gas and we'd see $5.00/mcf in January.

[dan_s]

Nat Gas prices lost some of its upside momentum since the release of the today's EIA inventory report. The EIA reported a net withdrawal from inventory that was below the market consensus and only slightly above the so called normal five year average for the same week. The market has been surging higher as a cold spell grips major areas of the US with the forecasters expecting the bitter cold temperatures to linger for at least another week or so before moderating sometime during the second half of December.

The spot Jan Nymex Nat Gas contract is still in positive territory for the session but currently off of its intraday high of the day. The spot contract is now solidly in the $4.30/mmbtu to $4.50/mmbtu trading range. The market is likely starting to look past today's inventory number and focusing on next week's reports as the bitter cold this week is likely to result in a significantly larger net withdrawal next week. I am already seeing projections for a withdrawal in the range of 250 to 275 BCF next week.

A draw over 250 bcf will be VERY BULLISH.

[dan_s]

Last year, the 2nd and 3rd weeks of December storage reports showed draws of -82 and -72. So, it now looks like the year-over-year difference in ngas storage will be ~500 bcf before Christmas.

If so, the natural gas prices could push to $5.00/mcf in the 1st quarter.

On 12/28/2012 there was 3,517 bcf in storage.

On 12/6/2013 there was 3,533 bcf in storage (with 22 very cold days to go). It looks like the next three storage reports will show storage under 3,000 by Friday 12/27/2013, more than 500 bcf less gas available for home heating than we had a year ago. That is significant.

[dan_s]

http://www.americanoilman.com/

The website above is where I go to see historical gas storage levels. Click on "Gas Storage" in the upper left corner.

[ghrcap]

The NOAA temperature predictions for Christmas week have gotten colder for more of the country as this week has progressed. On Monday they were suggesting a warming trend. The gassers I watch seemed to strengthen over the last 90 minutes of trading today.
http://www.cpc.ncep.noaa.gov/products/p ... /index.php

[dan_s]

Look at that map and remember that Illinois, Michigan, Minnisota, Wisconsin, Ohio and Texas are the states that burn the most gas for residential space heating.
When cold fronts drive deep into the southeast is when you see the really big draws.