Energy Prospectus

Working gas in storage was 3,460 Bcf as of Friday, December 25, 2020, according to EIA estimates. This represents a net decrease of 114 Bcf from the previous week.
Stocks were 251 Bcf higher than last year at this time and 206 Bcf above the five-year average of 3,254 Bcf.
At 3,460 Bcf, total working gas is within the five-year historical range.

The last four weekly storage reports have been draws larger than the 5-year average. So, over the 28 days ending December 25 the delta to the 5-year average has declined by 94 Bcf. It also looks like next week's report will show a draw larger than the 5-year average draw of 118 Bcf.

The first two weeks of January are normally the largest two weekly draws of the year.
> For the week ending Jan 8 the 5-year average draw is 199 Bcf
> For the week ending Jan 15 the 5-year average draw is 197 Bcf

Last winter we had five weeks in a row (Dec 21 to Jan 24) with draws from storage that were much lower (combined 424 BCF lower) than the five year average. The warm January killed gas prices in Q1 2020, which resulted in a historic decline in natural gas prices to $1.53 on April 2.

Thanks to lots of wells being shut-in during April and May, the ngas price rebounded to slightly over $2.00 in early May, only to decline to $1.44 on June 24th.
> Lower supply and increased demand for power generation during the summer, send ngas back over $2.60 in late August.
> With the end of summer we saw ngas prices dip to $1.83 on Sept 22
> From the Sept 22 low EIA reported six straight storage builds that were below the 5-year average; reducing the surplus to the 5-year average by 237 BCF.
> Ngas price spiked to $3.34 on Oct 30 thanks to a 36 BCF draw from storage for the week ending October 30th; the earliest draw from storage in over ten years.
> From November 7 to 27 mild weather caused the surplus to the 5-year average to rebuild by 101 BCF, causing the FEAR of a gas shortage this winter to fade away.
> Ngas prices pulled back in December, but there appears to be solid support at around $2.40
> We should get another triple digit storage draw next week (for the week ending Jan 1, 2021), which should push ngas back over $2.50.
We seem to be moving into a more normal winter weather pattern. See 10-day forecast here: https://weather.com/maps/tendayforecast

Weather is the PRIMARY DRIVER OF GAS PRICES this time of year. Unless we get a repeat of last January's much milder winter weather, gas prices should stabilize. Lower U.S. gas production and higher exports should push ngas in storage below the 5-year average by the end of March. Extremely high (over $10/mcf) gas prices in Asia have pushed LNG exports to our maximum capacity. A "Paradigm Shift" from a surplus to an extended period of storage below the 5-year average with power generation and industrial demand coming on strong next summer sets up a bullish year for the "gassers". "Hope Springs Eternal".