Natural Gas Storage Report - April 12

[dan_s]

Working gas in storage was 1,335 Bcf as of Friday, April 6, 2018, according to EIA estimates. This represents a net decrease of 19 Bcf from the previous week. Stocks were 725 Bcf less than last year at this time and 375 Bcf below the five-year average of 1,710 Bcf. At 1,335 Bcf, total working gas is within the five-year historical range. < In the bottom 1/3rd of the 5-yr range.

My prediction is that storage will be 800 Bcf below last year at the end of April.

Last year's builds over the next three weeks were +54 Bcf, +74 Bcf and +67 Bcf. < This year we will be lucky to see half that amount going into storage.

The NE quarter of the U.S. is expected to remain much colder than normal over the remainder of April. A major winter storm is heading to Minn and Wis this weekend.

If storage is 800 Bcf below where it was last year at the end of April, that will increase demand for natural gas by over 4 Bcf per day during the refill season. STORAGE MUST BE REFILLED BEFORE THE NEXT WINTER HEATING SEASON ARRIVES. It is not optional.

[dan_s]

If builds remain lower than last year through May, then I believe the utility companies will start to get nervous and begin bidding up NYMEX futures contracts for this fall.

A hot summer that increased demand for power generation could make this really interesting to watch.

[dan_s]

Weather in the Great Lakes Regions is the key area for natural gas demand for space heating. Chicago is the "Bulls Eye".

See Chicago's 10-day forecast: https://www.wunderground.com/weather/us/il/chicago

Illinios, Michigan, Minn, Ohio and Wis are the five states that burn the most natural gas for space heating. Check out the 10-day forecast for the major cities in those states.

[dan_s]

Raymond James: "This week's withdrawal of 19 Bcf was above the consensus estimate of a 12 Bcf withdrawal and our estimate of a 15 Bcf withdrawal. This implies that the market was 3.4 Bcf/d looser than last year on a weather-adjusted basis and it has averaged 2.7 Bcf/d looser over the past four weeks. As it relates, total gas in storage now stands at 1,335 Bcf, and the y/y storage deficit of 697 Bcf increased by 29 to a deficit of 726 Bcf. Longer term, 2018 should prove to be a positive year for natural gas demand, as both exports to Mexico and outbound LNG tanker activity ramps-up. On the supply side, less Canadian import activity is expected. However, we believe an increasing domestic gas supply and growth in renewables that are increasingly becoming more cost competitive with gas will put further pressure on Henry Hub gas prices."