Working gas in storage was 2,308 Bcf as of Friday, July 27, 2018, according to EIA estimates. This represents a net increase of 35 Bcf from the previous week.
Stocks were 688 Bcf less than last year at this time and 565 Bcf below the five-year average of 2,873 Bcf.
At 2,308 Bcf, total working gas is below the five-year historical range.
The delta to the 5-year average continues to grow despite mild temperatures in the eastern third of the country. Note that ngas storage is now BELOW the five year range and demand for natural gas in MUCH HIGHER than it was five years ago.
Demand for gas fired power generations in Texas and the West Coast must be at an all-time high and industrial demand is very strong.
Natural Gas Storage Report - August 2
Natural Gas Storage Report - August 2
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Natural Gas Storage Report - August 2
From the Wall Street Journal on 8-1-2018: With storage well below year-ago levels, the U.S. natural-gas market could be left exposed to a frigid winter like 2013-2014 when prices surged by 75% over the span of several weeks
The first week of August seems like an odd time to fret about a frigid winter, but perhaps not for people who buy, sell and store natural gas.
Following last Thursday morning’s weekly report from the Energy Information Administration, the amount of gas in U.S. underground storage was around 2.3 trillion cubic feet and should keep rising for the next three months. Yet that cushion now stands 24% below where it was this time last year and 20% below the five-year average. Futures prices don’t reflect any scarcity, being exactly where they were a year ago.
The main reason traders are so sanguine is that the U.S. has been in a natural-gas glut for the past decade. There are areas of the country such as the prolific Permian Basin where some producers would practically give away their gas for nothing given the option. New pipelines in the prolific Utica and Marcellus shale formations coming online in the next weeks and months will allow even more of the region’s gas to reach users this winter.
But what seems like ample supply could set the market up for panicky winter buying. The last time that happened was in the winter of 2013-2014. Between the first day of that heating season and the peak in mid-February, Henry Hub natural-gas futures prices surged by 75% to a peak of $6.15 a million British thermal units. Local cash prices in areas with surging demand briefly reached over $100/MMBtu.
In that season, gas in underground storage dropped by nearly 3 trillion cubic feet between November and April after starting out on the low side. If the rest of this summer and fall resemble last year, though, then the starting level of storage for the upcoming heating season will be nearly identical to what it was in November 2013.
Conditions nationwide don’t have to be extreme as long as it is cold in the right places. For example, the National Oceanic and Atmospheric Administration says the period from December 2013 through February 2014 was only the 34th coldest for the contiguous 48 states since reliable records began in 1895. That season was in the top 10 for states like Michigan, Illinois, Wisconsin, Missouri that rely on gas rather than heating oil or electric heat pumps to stay warm.
Production is higher today, but so is underlying demand. Years of cheap and plentiful gas and tougher environmental regulations have, despite the Trump administration’s best efforts, continued to displace coal as a generation fuel. In 2017, the EIA estimated that some 30% of U.S. power was generated by coal. The EIA sees that falling to 28% by next year. Gas will fill the gap. The agency noted at the beginning of the year that more natural-gas-fired generating capacity would come online this year than any year since 2004.
Energy-market history won’t repeat itself, but gas traders shouldn’t dismiss the possibility that it will rhyme.
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MY TAKE: This topic will get a lot more attention after Labor Day, especially if storage is still more than 500 Bcf below the 5-year average at the end of August. - Dan
The first week of August seems like an odd time to fret about a frigid winter, but perhaps not for people who buy, sell and store natural gas.
Following last Thursday morning’s weekly report from the Energy Information Administration, the amount of gas in U.S. underground storage was around 2.3 trillion cubic feet and should keep rising for the next three months. Yet that cushion now stands 24% below where it was this time last year and 20% below the five-year average. Futures prices don’t reflect any scarcity, being exactly where they were a year ago.
The main reason traders are so sanguine is that the U.S. has been in a natural-gas glut for the past decade. There are areas of the country such as the prolific Permian Basin where some producers would practically give away their gas for nothing given the option. New pipelines in the prolific Utica and Marcellus shale formations coming online in the next weeks and months will allow even more of the region’s gas to reach users this winter.
But what seems like ample supply could set the market up for panicky winter buying. The last time that happened was in the winter of 2013-2014. Between the first day of that heating season and the peak in mid-February, Henry Hub natural-gas futures prices surged by 75% to a peak of $6.15 a million British thermal units. Local cash prices in areas with surging demand briefly reached over $100/MMBtu.
In that season, gas in underground storage dropped by nearly 3 trillion cubic feet between November and April after starting out on the low side. If the rest of this summer and fall resemble last year, though, then the starting level of storage for the upcoming heating season will be nearly identical to what it was in November 2013.
Conditions nationwide don’t have to be extreme as long as it is cold in the right places. For example, the National Oceanic and Atmospheric Administration says the period from December 2013 through February 2014 was only the 34th coldest for the contiguous 48 states since reliable records began in 1895. That season was in the top 10 for states like Michigan, Illinois, Wisconsin, Missouri that rely on gas rather than heating oil or electric heat pumps to stay warm.
Production is higher today, but so is underlying demand. Years of cheap and plentiful gas and tougher environmental regulations have, despite the Trump administration’s best efforts, continued to displace coal as a generation fuel. In 2017, the EIA estimated that some 30% of U.S. power was generated by coal. The EIA sees that falling to 28% by next year. Gas will fill the gap. The agency noted at the beginning of the year that more natural-gas-fired generating capacity would come online this year than any year since 2004.
Energy-market history won’t repeat itself, but gas traders shouldn’t dismiss the possibility that it will rhyme.
---------------------
MY TAKE: This topic will get a lot more attention after Labor Day, especially if storage is still more than 500 Bcf below the 5-year average at the end of August. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Natural Gas Storage Report - August 2
We will be sending out an updated profile on Range Resource (RRC) late today or tomorrow morning. It is one of my Top Picks if you believe natural gas prices will firm up.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Natural Gas Storage Report - August 2
Comments from TPH on 8-3-2018:
"Natural gas inventories built 35bcf, ~7bcf below both norms and expectations, 42bcf build. 2018 inventories are now 23bcf below the 5-yr min (2,331bcf). For the 3rd consecutive week, the market appears undersupplied on a weather-adjusted basis as US supply was ~flat w/w and demand was supported by an increase in LNG exports (+300mmcfd w/w). After being re-benchmarked to the latest monthly EIA data, Mexican exports are trending upwards as data suggests incremental flows on the El Encino -- Topolobampo pipeline (~100mmcfd). We still expect the market to be oversupplied entering withdrawal season (via a Northeast production ramp), but acknowledge short-term dynamics are getting increasingly more bullish with each passing week."
"Natural gas inventories built 35bcf, ~7bcf below both norms and expectations, 42bcf build. 2018 inventories are now 23bcf below the 5-yr min (2,331bcf). For the 3rd consecutive week, the market appears undersupplied on a weather-adjusted basis as US supply was ~flat w/w and demand was supported by an increase in LNG exports (+300mmcfd w/w). After being re-benchmarked to the latest monthly EIA data, Mexican exports are trending upwards as data suggests incremental flows on the El Encino -- Topolobampo pipeline (~100mmcfd). We still expect the market to be oversupplied entering withdrawal season (via a Northeast production ramp), but acknowledge short-term dynamics are getting increasingly more bullish with each passing week."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group