Natural Gas Storage Report

[dan_s]

Working gas in storage was 2,357 Bcf as of Friday, May 28, 2010, according to EIA estimates. This represents a net increase of 88 Bcf from the previous week. Stocks were 38 Bcf higher than last year at this time and 306 Bcf above the 5-year average of 2,051 Bcf.

With so much gas out there it is hard to imagine the price of natural gas moving much higher. Frankly, it has held up much better than I thought it would.

At this rate our storage will be filled by the end of August which will cause a lot of gas-on-gas competition that will put a lot of pressure on the gas price.

However, we do get a lot of our gas from the Gulf of Mexico. So if the Federal Moritorium on GOM drilling goes on for awhile it will begin to eat into our supply.

A couple other things the Bulls are counting on:
1. Long-range weather forecasters are calling for a very hot summer, especially in the Southeast. Texas and the SE have a lot of NG fired power plants that are used to meet peak electrical demand. Those units can burn a lot of gas in July & August. One year we actually saw three weekly draws from storage during the summer to meet the demand for power generation.
2. Hurricanes in the GOM can shut-in a lot of gas. The forecast is for a very active hurricane season. God help us if the BP oil spill has not been contained before a major hurricane enters the area.
3. There are definitely signs that industrial demand (outside of power generation) is picking up. Industrial demand is the #1 use of natural gas.

Long-term I remain very bullish on NG. I believe it is THE energy solution for the U.S. Sooner or later even the idiots in Washington will figure it out.

Isn't it sad that we have so little faith in our elected officials?

Dan