Energy Prospectus

Working gas in storage was 2,074 Bcf as of Friday, June 22, 2018, according to EIA estimates. This represents a net increase of 66 Bcf from the previous week. Stocks were 735 Bcf less than last year at this time and 501 Bcf below the five-year average of 2,575 Bcf. At 2,074 Bcf, total working gas is within the five-year historical range.

Note that the delta to the 5-year average INCREASED by 2 Bcf since last week's report.

About six weeks ago, I posted here that if natural gas storage was still 400 Bcf below the 5-year average at the end of June that it would be VERY BULLISH FOR GAS PRICES and that we would see the utilities bidding against each other aggressively in the fall for gas supply. NOW it looks like storage will be very close to 500 Bcf below the 5-year average on June 30 and a heat wave is expected in the NE quarter of the U.S. during the first week of July.

The Wall Street Gang is fixated on crude oil prices today, but at some point in the 3rd quarter they will notice this very tight U.S. gas market.

I checked the 5-year chart and the 5-year average storage builds are:

73 Bcf for the week ending June 29
81 Bcf for the week ending July 6

So ..... we are likely to see the delta to the 5-year average actually increase over the next two weeks.

The peak of summer demand for gas, primarily for power generation (air conditioning demand) is the second half of July. Right now, the long-range weather forecasts show the peak for heat in the eastern half of the U.S. coming earlier this year. After July 10 it now looks like the rest of July will be slightly cooler than normal in the eastern U.S. Of course, "slightly cooler" is relative to "extremely hot" when it comes to July and August.