Natural Gas Market

[dan_s]

If you have investments in any upstream companies that produce lots of natural gas, you MUST watch the Saturday Update at https://www.weatherbell.com/premium/

It now looks like ngas in storage will be 200 BCF below the 5-year average by the end of November.

December should be bullish for natural gas prices. Keep an eye on the total amount of gas in storage at the end of December. The 5-year average is 3,300 BCF in storage on 12/31. Based on my analysis and a bit of SWAG, storage may be 300 below the 5-year average after Chrismas this year. If storage is near 3,000 BCF at year-end the utility companies will begin a bidding war for gas supply. When the physical market gets competitive all bets are off on high gas prices may spike.

In my November 14 podcast, I showed a 20 year chart of natural gas prices (slide 14). There have been seven significant price spikes for natural gas in the last 20 years. None of them were expected and all of them happened when weather caused supply concerns.

Gas utility companies, the ones that deliver gas to your home, control the "physical" gas market. Utility companies are REQUIRED BY LAW to maintain adequate pressure in the residential gas pipes. The penalties are severe if they let the pressure drop because lives are at stake. Therefore, utility companies will pay literally whatever it takes to get gas supply during winter heating season. When I was at Hess Corp, we once sold gas in the New York market at $60/mcf during the winter.

Old Man Winter owes the "gassers" a nice Christmas and it appears that he's wrapping it in a cold start to December.

[par_putt]

Lets hope that Mexico gets exports from permian going.

https://www.investorvillage.com/groups. ... d=17723004

[dan_s]

The U.S. is already exporting ~4.5 BCF per day to Mexico and I heard that they will take up to 7.0 BCF if we can get it there. ONEOK pipes send a lot of gas to Mexico.

Stuff like this always sounds worse than it ends up being. Midstream companies work it out.