Natural Gas Comments

[dan_s]

During one of my podcasts in November I predicted that U.S. natural gas in storage would end the year 300 BCF below the 5-year average by December 31st. We have some work to do, but that is still possible thanks to a BIG CHANGE in the weather. BTW in Sugar Land I turned on our AC at noon yesterday because it was 80F and humid. Twelve hours later it was near 40F. The heat is on today and Susan has the gas logs burning in the fire place.

EIA reported on Thursday, that U.S. natural gas in storage was 3,444 Bcf on December 15th; 84 Bcf below the 5-year average.
The 5-year average storage level on December 31st is 3,307 Bcf. So, our goal is to get storage down to 3,007 over a 16 day period (12/15 to 12/31).

Next week's storage report (for the week ending December 22) should show a decline near the 5-year average of 114 Bcf for the week. That will take storage down to 3,330 Bcf.

Then it gets interesting. Starting today (12/23) a lot of gas is being sucked from U.S. storage to meet home heating demand. Go watch the Weather Channel today and you will see that two VERY COLD ("Polar Vortex") fronts are going to move through the Great Lakes Region. The second one will push record cold deep into the South on New Years Day. This is the kind of weather that takes 50 Bcf per day from storage.

So, if the average draws from storage are 33 Bcf per day over the last ten days of 2017, Mother Nature will push U.S. natural gas storage 300 Bcf below the 5-year average on 12/31/2017. Old Man Winter has some work to do, but he seems to be doing his best.

PS: The second Polar Vortex is expected to set record cold temperatures, 30F to 40F below normal, in the Ohio River Valley area. The five states that consume the most gas for space heating are Illinois, Michigan, Ohio, Minnesota and Wisconsin. The big draws from gas storage come when sub-freezing temps push deep into the South were everyone heats their homes with natural gas.

PPS: The next two week are also extremely bullish for NGL prices.