NG Storage Report - January 24

[dan_s]

Working gas in storage was 2,996 Bcf as of Friday, January 18, 2013, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 157 Bcf less than last year at this time and 320 Bcf above the 5-year average of 2,676 Bcf.

It now looks like NG storage will be down to approximately 2,700 bcf by the end of January. IMO that is very bullish since a month ago that level looked out of reach. If gas in storage drops to 2,200 bcf by the end of March I think $3.50/mcf is a good price to use for our forecast models. Keep in mind that this price is still below break-even for most of the dry gas shale plays, so supply / demand should continue to tighten. It is also a price that will keep the utilities using a lot of gas for power generation.

If heating season ends with gas in storage below 2,000 bcf, then I think we have a good shot at gas moving over $4.00/mcf, but that is quite optimistic.