Energy Prospectus

Working gas in storage was 2,866 Bcf as of Friday, September 28, 2018, according to EIA estimates. This represents a net increase of 98 Bcf from the previous week.
Stocks were 636 Bcf less than last year at this time and 607 Bcf below the five-year average of 3,473 Bcf. At 2,866 Bcf, total working gas is below the five-year historical range.

The 5-year average build for this week is 85 Bcf.

The next two weekly reports s/b close to the 5-year average builds (89 Bcf and 77 Bcf) and then the weekly builds will decline rapidly as colder weather spreads from the West to the East.

In the last 13 weeks (~3 months) the deficit to the 5-year average has increased by 115 Bcf during a period when most analysts expected the gap to shrink. During this 13 weeks there were only three builds, with this one being the largest (13 Bcf over the 5-year average). Last week's build was 34 Bcf below the 5-year average.

My SWAG is that storage will be 3,250 Bcf on November 16, 2018, which is the final weekly build before draws from storage begin for winter heating season. That would be exactly 599 Bcf below the 5-year average and the lowest starting point in 8 years.

AR and RRC are listed among the TOP FOUR "gassers" in this article.

https://finance.yahoo.com/news/tap-clea ... 01392.html

What has been clear to me since the beginning of the year is that demand for U.S. natural gas is going up as much or faster than supply of U.S. natural gas. The EIA has been over-hyping the rapid growth in U.S. gas production and under-estimating demand. EIA and IEA have a long history of under-estimating demand for oil & gas.

There is extremely high demand for U.S. natural gas because it is the cheapest form of energy on the planet. Plus, as the article points out, there is extreme pressure on consuming nations (especially China) to lower air pollution. The trend to shift to more gas fired power plants is not showing any sign of slowing down. Plus, a gas fired power plant can be built in a fraction of the time it takes to build a nuclear or coal fired power plant and environmental groups also seem to like them (the "lesser evil").

AR and RRC are both profitable "gassers" that control a vast amount of proven reserves in the world's most important natural gas & NGL resource play, the Marcellus/Utica.

Weather will have a big impact on the natural gas price this month.

Watch the daily update here: https://www.weatherbell.com/premium/

1. There is a tropical storm forming now that will move into the Gulf of Mexico early next week. It has a chance to become a hurricane and Joe thinks will hit New Orleans.

2. There is a MAJOR cold wave moving down the Rockies today that will bring feet of snow to some areas. By mid-October much colder than normal weather will be spreading eastward. This is why I am predicting that there will only be two more significant builds in U.S. natural gas storage levels.

Some people think that an "El Nino" means we are going to have a mild winter. That is not the case. This is not going to be a "Super El Nino".

At the end of October, the December NYMEX contract becomes the "front month". I think the December contract will push over $3.50 before it closes around Thanksgiving. It is sitting at $3.24 as I write this post, so I'm not "way out there" with this prediction. If we have a cold December, I predict that the January NYMEX contract will push over $4.00, creating a VERY MERRY CHRISTMAS for our gassers.