EIA projects record natural gas storage injection in 2014 to boost stocks from 11-year low
http://www.eia.gov/todayinenergy/detail.cfm?id=15391
Note that EIA is projecting storage level at end of refill season will be ~3,300 bcf. That would be 500 bcf lower than where we started last winter.
EIA Natural Gas Storage Forecast
EIA Natural Gas Storage Forecast
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EIA Natural Gas Storage Forecast
STEO projects relatively high natural gas production growth and moderate demand growth starting in April that will allow for a record storage build through October. The forecasted April-to-October storage build of nearly 2,500 Bcf would surpass the previous record injection season net inventory build (April-October, 2001) by more than 90 Bcf, to end the injection season at 3,459 Bcf. While the projected storage build for the upcoming injection season would be a record, total Lower 48 end-October inventories in 2014 would still be at their lowest level since 2008. High injections would not fully erase the deficit in storage volumes caused by this winter's heavy withdrawals.
The STEO expects spot prices will be in the low $4 per million British thermal unit (MMBtu) range over the summer, a level high enough to limit the growth of natural gas use in the electric power sector. As a result, and assuming close-to-normal weather this summer, EIA projects that electric power consumption of gas from April to October will be 23.9 Bcf/d, essentially flat compared to year-ago levels. Expected dry natural gas production during this period reaches 68.1 Bcf/d, a 2% increase over last year.
OK, what happens if:
> We have a hot summer in the South that increases demand
> We have an active hurricane that lowers supply
All eyes will be on the weekly refills in April & May. If they are low, the price will begin to rise.
The STEO expects spot prices will be in the low $4 per million British thermal unit (MMBtu) range over the summer, a level high enough to limit the growth of natural gas use in the electric power sector. As a result, and assuming close-to-normal weather this summer, EIA projects that electric power consumption of gas from April to October will be 23.9 Bcf/d, essentially flat compared to year-ago levels. Expected dry natural gas production during this period reaches 68.1 Bcf/d, a 2% increase over last year.
OK, what happens if:
> We have a hot summer in the South that increases demand
> We have an active hurricane that lowers supply
All eyes will be on the weekly refills in April & May. If they are low, the price will begin to rise.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EIA Natural Gas Storage Forecast
I now think there is a 95% chance that ending storage is below 800 bcf and that draws continue into first week of April.
The big story will be where we are at the end of April. If refill starts slowly, compressing the refill period, then I think "the bidding war begins" and gas prices will push over $5.00.
If there are large injections to storage in April / May then the price may stay in the $4.50 range. Regardless, natural gas prices are going to be much higher this year than they were last year. NGL prices should also stay much higher.
The big story will be where we are at the end of April. If refill starts slowly, compressing the refill period, then I think "the bidding war begins" and gas prices will push over $5.00.
If there are large injections to storage in April / May then the price may stay in the $4.50 range. Regardless, natural gas prices are going to be much higher this year than they were last year. NGL prices should also stay much higher.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group