Natural Gas - Bullish Weather Pattern

[dan_s]

The last time natural gas prices moved over $5.00 was the winter of 2013-2014. There were actually spikes to $6.00. During that winter (just four years ago), natural gas in U.S. storage went below 3,000 BCF before December 31st. I believe there is a good chance that will happen again this winter because:

1. Gas in storage should be under 3,800 BCF when draws from storage begin in a few weeks.
2. Draws are likely to begin next week, which would be the earliest draws on record.
3. Last winter, 736 BCF was draw from storage before December 31st.
4. The forecasted weather pattern for the next 45-days is very close to what happened in 2013, except colder.
5. During November and December of 2013, 859 BCF was drawn from storage.

Now, go to https://www.weatherbell.com/premium/ and watch the daily update where Joe talks about the winter of 2013-2014.

BTW natural gas demand is much higher than it was four years ago.

Including exports, the U.S. natural gas market (the world's largest gas market) is approximately 80 BCF per day, but demand goes way up in the winter. The U.S. natural gas market is expected to be close to 100 BCF per day by 2020. Exports are currently ~7 BCFpd. By 2020 we will have export capacity over 19 BCFpd.

[ChuckGeb]

How long did gas prices remain above $5 and what were prices that year at Memorial Day?

[dan_s]

See for yourself here: http://www.macrotrends.net/2478/natural ... ical-chart

Here are the average prices during the first half of 2014.
Jan = $5.32 (with spikes to over $6.00)
Feb = $5.04
Mar = $4.68
Apr = $4.99
May = $4.66
Jun = $4.55

The winter of 2013-2014 was quite cold all winter. As I pointed out during my podcast (see slide 4), gas in storage dropped to an historic low of 824 BCF at the end of March, 2014. You can confirm this for yourself here: http://www.americanoilman.com/ < Just click on "Gas Storage" in upper left.

TO BE CRYSTAL CLEAR: My SWAG is that the physical gas market in the United States will tighten by the end of December. This will cause competitive bidding in the spot market between the utility companies. The spot market or "physical market" will have an impact on the speculative traders that set the NYMEX futures prices, which is what you see in the business news each day. This may be a short-term impact if the weather turns warmer in January. However, if we have a COLD WINTER that takes gas storage down to 1,000 BCF it could result in higher prices all year. See Slide 7 of the podcast.

My forecast of higher gas prices is a SHORT TERM FORECAST and I think the best we can hope for is $4.00 gas unless December is very cold in the Great Lakes Region.

Now read this: https://www.forbes.com/sites/woodmacken ... 5ae73e1493

[k1f]

At the moment the bears are still in control:

What's Next For Nat Gas? Citi Sees Chance For 'Higher Peaks'

12:32 pm ET October 19, 2017 (Benzinga)
Natural gas prices slumped to their lowest level in months Thursday, but Citi analyst Edward Morse believes liquid natural gas could be headed higher in the short term. In a new research note, Morse said LNG prices have already begin their seasonal march higher, rising to nearly $9/MMBtu. According to Morse, LNG price could grind to as high as $13/MMBtu during the winter.

“Although new liquefaction facilities are coming online this winter, the full impact of this new supply may be deferred to the spring,” Morse wrote.
Morse said LNG prices will depend largely on thermal coal prices and prices of other petroleum-based heating fuels. Coal prices and crude-adjusted LPG currently elevated in a high-demand environment. Despite the potential for near-term upside, Morse said the LNG price surge will likely only be temporary as more liquefaction capacity comes online in the spring. Citi recently raised its 2018 natural gas price forecast from $3.05/MMBtu to $3.10.

Bernstein says its bear thesis calling for disappointing demand, rising oil-associated gas production and an increase in take-or-pay contracts in the Macellus and Utica regions is already playing out. The firm expects gas prices to hit $2.50/MMBtu by mid-2018.

It’s been a tough week for natural gas investors. Shares of the United States Natural Gas Fund, LP (NYSE: UNG) are down 4.4 percent in the past five days, and the VelocityShares 3X Long Natural Gs ETN linked to the S&P GSCI Natural (NYSE: UGAZ) is down 10.8 percent in that time. Natural gas bears have been the real winners in 2017. The VelocityShares 3X Inverse Natural Gas ETN linked to the S&P GSCI Natural (NYSE: DGAZ) is up 84.7 percent year to date.

Related Link: How The Bear Thesis On Nat Gas Is Playing Out

© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

[dan_s]

Three Things Wall Street Should Look for in Gas Driller Earnings. Blooomberg.

Though Hurricane Harvey temporarily cut gas output from Texas shale reservoirs in August and September, production is poised to rebound in the fourth quarter led by producers in the U.S. Northeast after pipelines like Energy Transfer Partners LP’s Rover project start service. These new lines will probably come close to operating at full capacity, Subash Chandra, managing director and senior analyst at Guggenheim Securities LLC in New York, said by phone. “You can’t just really fill the new pipes by just redirecting prior gas flows,” Chandra said. “You’re going to have to drill more.” Gas production in the Northeast hit a record 24 billion cubic feet a day in September. This month, production has fluctuated as stiff competition for service crews delayed drilling in some areas, James Sullivan, an analyst at Alembic Global Advisors in New York, said by phone.

https://www.bloomberg.com/news/articles ... r-earnings