Energy Prospectus

Working gas in storage was 3,387 Bcf as of Friday, September 6, 2024, according to EIA estimates.
This represents a net increase of 40 Bcf from the previous week. < Lowers the surplus by another 27 BCF
Stocks were 198 Bcf higher than last year at this time and 296 Bcf above the five-year average of 3,091 Bcf.
At 3,387 Bcf, total working gas is within the five-year historical range.

The 40 Bcf build is 9 Bcf lower than the Celsius Energy forecast.

Since April 19 storage builds have been lower than the 5-year average for 19 of 20 weeks.
The surplus to the 5-year average has declined by 399 Bcf from 695 Bcf to 296 Bcf.

We are on pace to wipe out the surplus to the 5-year average by early December.

There are ten weeks remaining in the refill season that officially ends November 15. My WAG is that the surplus will be reduced by another 245 Bcf during that ten weeks, so the surplus should be less than 50 Bcf by the time draws for space heating begin. That is a rounding error.

If storage goes from a surplus to a deficit during December, it will be a "Paradigm Shift" that will draw a lot of attention.

I discuss this in my September 8th podcast, which is still available on the EPG website home page.

EQT, CTRA and CRGY are my top picks in our Sweet 16 for those of you bullish on natural gas prices.
BSM and KRP are mineral/royalty companies in our High Yield Income Portfolio that will benefit the most from rising natural gas prices. They both have dividend yields over 10%.

Note that NGas in storage is 198 Bcf higher than last year. Based on my forecast of storage builds, that number will go negative by the end of October.

So, my forecast is that gas in storage will be lower on November 15 than it was a year ago.

Next catalyst for natural gas prices will be the announcement that Venture Global's big LNG export facility at Plaquemines is on line. They are targeting the end of September. That facility and Cheniere's Train 3 at Corpus Christi will increase demand for U.S. natural gas by 3.3 Bcf by December.

This will be a BIG Paradigm Shift. Most investors think we have a natural gas surplus that won't end. It is going to be GONE by December.

Trading Economics:
"US natural gas futures rose above $2.35/MMBtu, near a two-month high, after the EIA reported a smaller-than-expected storage build of 40 billion cubic feet, below the 49 bcf forecast. Despite the smaller build, storage levels remain 9.6% above the five-year average, reflecting a supply surplus. Traders are also weighing the impact of Hurricane Francine, which disrupted oil and gas production in the Gulf of Mexico. The storm hit southeast Louisiana, southern Mississippi, and Alabama, causing flooding, power outages, and reduced gas demand due to limited flows to LNG export facilities. Louisiana hosts three of the seven major US LNG export plants, and feedgas flows to these facilities are expected to drop further as companies pull back operations amid the storm."

If we have a normal winter, there will be a Bidding War for gas supply within six months.

I love the smaller builds.

The only downside is that with the current trend of warmer weather, there will be smaller draws once the heating season begins. So I have to hope we get to a Normal Winter earlier in winter. No doubt Celsius Energy is using the best forecast models for beyond November.

That said, just getting back to the 5 year inventory average helps a lot.

Kevin

I believe in "Climate the Same". We've had two mild winters in a row in the eastern half of the U.S. just because of the strong El Ninos in the Central Pacific. This Earth has a complex weather system AND it has been having shifts in weather patterns since it was created.

If Ms La Nina does her job, the northern jet stream should bring much colder air and more snow into the NE quarter of the U.S. this coming winter.

Regardless of the weather, demand for U.S. natural gas will be much higher in 2025 due to LNG exports, power generation and industrial demand.