Energy Prospectus

Working gas in storage was 3,189 Bcf as of Friday, July 20, 2012, according to EIA estimates. This represents a net increase of 26 Bcf from the previous week. Stocks were 487 Bcf higher than last year at this time and 435 Bcf above the 5-year average of 2,754 Bcf.

Gas surplus keeps shrinking. Gas being used for power generation has leveled off and my be coming down a bit as more nukes come back on-line. Plus, coal is getting cheap enough to replace some of the gas.

Barring a hurricane, which will support higher gas prices, I think NG prices could dip to $2.70 in Sept/Oct. This is still much better than I thought just a couple months ago. I now think NG could top $4/mmbtu by January, assuming a normal December winter. A major cold wave into the South on Thanksgiving sure would be nice.

i have seen a report that some generator owners are nervous about having too little pipeline capacity to run on natty if too many converted from coal.
also, some are reminded of the bad winter in tx a couple of years ago when nat gas compressors were shut down.

According to Forbes:

The weekly EIA natural gas storage numbers reported each Thursday came in with a 28 billion cubic feet (bcf) injection. The inventory increase last year at this time was 67 bcf while the five-year average accretion was 74 bcf.

So true that one week does not a trend make. But this makes eleven straight weeks that have experienced below average storage injections.

After Thursday’s numbers were released inventories stood at 3.163 trillion cubic feet, or 19.2% above last year — but only 17.5% above the five-year average.
A seemingly decent cushion until you consider as recently as May 10 stockpiles were 48.4% and 49.9% ahead of the previous year and the five year averages respectively.

Rig Count is Down

The rig count for NG hit the top in the summer of 2008 at 1,600 back when the price of NG was above $13.

Three days ago, the rig count fell to the lowest levels since 1999.
The number of working rigs has fallen 45% over the past nine months and now stands at 518.

The price of NG hit a bottom at $1.89 back in April.