Energy Prospectus

Working gas in storage was 3,054 Bcf as of Friday, November 23, 2018, according to EIA estimates. This represents a net decrease of 59 Bcf from the previous week.
Stocks were 644 Bcf less than last year at this time and 720 Bcf below the five-year average of 3,774 Bcf.
At 3,054 Bcf, total working gas is (WAY) below the five-year historical range.

The delta to the 5-year average keeps getting larger; by 25 Bcf this week.

In the last six weeks the delta to the 5-year average has grown by 81 Bcf. < If this keeps up (draws larger than the 5-yr ave) we are going to have a BIG PROBLEM.

There are five weeks and three days (38 days) from November 23rd to December 31st.
The 5-year average draws during the last 38 days of the year are 586 Bcf.
> 3054 Bcf - 586 Bcf = 2,468 Bcf in storage heading into the 1st quarter.

Less than 2,500 Bcf is not enough gas to make it through a normal winter without significant regional shortages.

Gas prices have pulled back this morning because yesterday's trading was "crazy". Short-covering on its last day of trading pushed the December NYMEX contract to $4.80/MMBtu. There was record buying in all three of the first quarter futures contracts. Some longs were taking profits this morning before the storage report came out. A draw of 59 Bcf looks small compared to last week's massive draw of 134 Bcf, it is still 25 Bcf larger than the 5-year average. Keep in mind that space heating demand does dip in the week of Thanksgiving because lots of businesses do shut down for the holiday. You will also see this the week of Christmas.

At 1:45 PM ET the NYMEX Strip for 2019 is trading at $3.22/MMBTU. That is close to $0.75/MMBTU higher than where it was trading a month ago.

Some time ago I had purchased Jan. 18, 2019 UNG calls. If you look on open market, the only January contract offered is Jan. 4, 2019. I had to go check and confirm my call options were dated Jan. 18, 2019 and they are... UNG converts to next month around 15/16th of each month. There must be so much risk on conversion from Feb to March contract that they aren't even offering that date any more. Very interesting.

"Real Winter" starts in December.

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

Joe goes through the national weather service's forecasts for December, January and February. If the pattern holds, we will see the "Mother of all Bidding Wars" in the spot markets for gas late in January or early February. The New England spot market is already firmly over $10/MMBtu.

Note Joe's snow forecast. It shows snow all the way down to the Gulf of Mexico during the first two weeks of December. I have lived in Houston for 26 years and we've only had one December snow.

If you live anywhere in the Northeast quarter of the U.S. you should really pay attention to this. We could see "Energy Rationing" this winter in some big cities and not just natural gas. Lots of areas now depend heavily on gas fired power plants for electricity. Last year, we saw the first three January draws from storage of 359, 183 and 288 Bcf. If we have a repeat of anything close to that in January this year, gas prices will go through the roof.

Developers push for relief from the natural gas moratorium in Massachusetts - Boston Globe .

It’s shaping up to be a chilly winter for Greater Boston’s development community. Trade group NAIOP Massachusetts has been pushing the Baker administration for help with the state moratorium on natural gas hookups in National Grid’s territory. The stoppage and a months-long labor dispute have delayed the completion of offices, apartments, and single-family homes. The word back from the administration: We hear you, but we’re not ready to ease the restrictions just yet. With winter approaching, many builders and developers are turning to pricey stopgap measures such as diesel generators and propane tanks. Even with unfinished projects, they need heat to protect interiors and to keep pipes from freezing — including those that feed sprinkler systems.