EIA - Natural Gas Storage Report - Feb 23

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

EIA - Natural Gas Storage Report - Feb 23

Post by dan_s »

Working gas in storage was 2,195 Bcf as of Friday, February 17, 2023, according to EIA estimates.
This represents a net decrease of 71 Bcf from the previous week.
Stocks were 395 Bcf higher than last year at this time and 289 Bcf above the five-year average of 1,906 Bcf.
At 2,195 Bcf, total working gas is within the five-year historical range.

There will be six more weekly draws from storage leading up to March 31st. My WAG is that 480 Bcf will be drawn from storage leading up to March 31st, so storage at the beginning of the refill season should be ~1,715 Bcf, which compares to the 5-year average of 1,540 Bcf. < A surplus to the 5-year average of less than 200 Bcf is not a "glut" and market forces are already moving to reduce U.S. natural gas production. Most of the upstream gassers will reduce their well completions this year. < Keep in mind that the U.S. natural gas market, including exports is over 100 Bcfpd (~37 TCF per year) and it is growing.

What else could help raise natural gas prices?
> #1 reason is that the "Paper Traders" get past having to cover so many long positions at the end of each month. The MAR23 NYMEX contracts should be the last of the large amount of contracts that need to be covered. APR23 becomes the front month contract tomorrow. It was trading at $2.368 at the time of this post.
> Freeport LNG export facility gets back to exporting 2 Bcfpd.
> The dip in the jet stream moves east and we have a colder than normal March in the eastern half of the U.S. Winter Storm Olive is helping.
> Winter hangs around until mid-April. This happened in April 2018 with draws of 19, 36 and 18 Bcf the first three weeks of April. < If we are lucky enough to have a cold April and a warmer than normal May (ramping up demand for power generation), we should see $4.00 ngas prices this summer.

All of my forecast/valuation models are now based on HH natural gas prices averaging $3.00 for the year.
$2.50 in Q1, $2.75 in Q2, $3.25 in Q3 and $3.50 in Q4.
Dan Steffens
Energy Prospectus Group
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