EIA - Natural Gas Storage Report - Aug 18

[dan_s]

Working gas in storage was 2,519 Bcf as of Friday, August 12, 2022, according to EIA estimates.
This represents a net increase of 18 Bcf from the previous week.
Stocks were 296 Bcf less than last year at this time and 367 Bcf below the five-year average of 2,886 Bcf.
At 2,519 Bcf, total working gas is within the five-year historical range.

This is VERY BULLISH since it is now nearly impossible for U.S. natural gas in storage to get anywhere close to the 5-year average by the beginning of the winter heating season. The North American natural gas market is under-supplied when compared to domestic demand and export demand.

During the last 25 years, U.S. natural gas prices have only gone over $10.00/MMBtu twice. $13.98 in Sept 2005 and $13.44 in June 2008, years before the Marcellus & Utica shale plays were ramping up. We are going to see the 3rd spike over $10.00 very soon and when Freeport LNG comes back online, we could see a new record price. All of our "Gassers" and going to report record quarters; probably three in a row.

My Top Picks are AR, CRK, EQT, RRC, SBOW (which we will profile today). In our High Yield Income Portfolio CTRA and DVN have the most exposure to natural gas. KRP is a royalty company with lots of exposure to natural.

[dan_s]

Trading Economics
"US Natural Gas futures were trading around the $9.30/MMBtu mark, not far from a 14-year peak of $9.75/MMBtu hit in late July, buoyed by strong overseas and domestic demand. The temperatures in the US this summer remain high, with several heatwaves boosting demand for air conditioners. Meanwhile, Freeport LNG has recently agreed with regulators to partially restart operations in October at its shuttered export plant in Texas and said it began to pull in tiny amounts of natural gas from pipelines. The resumption of flows will withdraw more natural gas from storage and boost exports. Adding to woes, demand from Europe remains strong as the critical Nord Stream 1 pipeline from Russia to Germany is currently running at 20% capacity."

This is a better gauge of how tight the U.S. natural gas market is: Over the last 13 weeks (a quarter of a year), net injections to U.S. gas storage locations have been 52 Bcf below the 5-year average. Even with Freeport offline since June 8, storage builds have been ~25 Bcf below the 5-year average.

There are just 13 weeks left in the refill season. My SWAG is that ~350 Bcf below the 5-year average on Friday, November 11. If Freeport LNG ramps up to exports of 2 Bcfpd by the end of October, the deficit could be over 400 Bcf.

[KGardiner]

Looking at the 5 year averages, the typical build for this week is about 46 bcf.
18 is very bullish indeed.

Still, it makes no sense to me my Nat Gas fell $0.25 as of this post?

Kevin

[dan_s]

The Day Traders ride it higher and then tighten up their stop loss orders. One big sell order then can trigger a "computer selloff". Once the price settles the bids start going up. NYMEX futures traders are using a lot of margin.

Supply and Demand will set the price eventually and this gas market is VERY TIGHT because we lack the infrastructure to increase supply very much.