Natural Gas Market Update - July 27

[dan_s]

HFIR Energy
HFI Research Natural Gas

Summary
> The probability of a natural gas storage filling early is increasingly disappearing as EIA reports tighter than normal storage builds.
> With September LNG cargoes done and traders seeing LNG feedgas flow returning to 6-7 Bcf/d, the worries about a storage tank top are starting to dissipate.
> After September, LNG cargo cancellation will be minimal as exports in October would arrive at the importing countries in Nov/Dec, or when heating demand starts.
> In essence, we only really have to focus on natural gas storage balance from now to the end of August. TDD changes in September and October won't be meaningful enough to move the needle, and with lower 48 gas production stalling out once again, market balances should continue to tighten.
> For us, we are sticking with EQT. We still see $17 in the near term. < My valuation is $21 for EQT.

Read more: https://seekingalpha.com/article/436070 ... e-tank-top

MY TAKE: They expect a big surge in LNG demand in October. By then U.S. industrial demand should be picking up and home heating demand starts in mid-November. U.S. natural gas supply should keep drifting lower. Lots of factors are lining up in a few months that should push natural gas prices a lot higher by year-end.