November Natural Gas prices saw a gap higher open Monday evening and managed to breakout to a fresh two week high. Prospects for cooler temperatures into October 21 have provided a modest shift in demand prospects. Also of support to the natural gas market is the elevated level of offline US nuclear capacity, which is seen putting a boost in near term natural gas power-generation demand.
If the weather forecasts start calling for a colder than normal November, we should see Ngas over $4.00 by Thanksgiving.
It is all about the weather this quarter.
Natural Gas Prices
Natural Gas Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Natural Gas Prices
From CME Group: NG higher on short covering
By Dominick Chirichella - Tue 08 Oct 2013 12:16:16 CT
Nat Gas prices have been in rally mode for the last two sessions with no strong reason for the surge (in my view). Market participants seemed to be focused on the changing weather patterns that should start to see some heating demand appearing over the next several weeks. Also the rally has been fueled from a technical perspective as prices failed several times to stay below the $3.50/mmbtu level after it breached this level on a post inventory report basis last week. The market may be starting to form a pre-winter heating season bottom.
Today the EIA released their latest Short term Energy Outlook and their Winter Forecast. Following are the main Nat Gas highlights.
• Under the baseline winter weather scenario, EIA expects end-of-October working gas inventories will total 3,830 billion cubic feet (Bcf) and end March 2014 at 1,890 Bcf. The projected 1,940 Bcf inventory drawdown during this winter is similar to the previous five-winters (October 2008 – March 2013) average of 1,940 Bcf.
• This year's Winter Fuels Outlook projects a drawdown of 2,340 Bcf in the cold-winter scenario (heating degree days 10% higher than projected), and 1,560 Bcf in the warm-winter scenario (10% fewer heating degree days). In the cold-winter scenario, storage inventories exit the heating season with a projected 1,450 Bcf at the end of March. However, this cold-winter scenario ending stock level is still higher than the average 1,271 Bcf end-of-winter stocks during the previous decade (2000-2009), reflecting increases in storage capacity as well as production over the last few years.
• EIA expects that natural gas consumption, which averaged 69.7 Bcf/d in 2012, will average 70.0 Bcf/d and 69.4 Bcf/d in 2013 and 2014, respectively. Colder winter temperatures in 2013 and 2014 (compared with the record-warm temperatures in 2012) are expected to increase the amount of natural gas used for residential and commercial space heating. However, the projected year-over-year increases in natural gas prices contribute to declines in natural gas used for electric power generation from 25.0 Bcf/d in 2012 to 22.1 Bcf/d in 2013 and 21.6 Bcf/d in 2014.
• Natural gas marketed production is projected to increase from 69.2 Bcf/d in 2012 to 70.0 Bcf/d in 2013 and to 70.4 Bcf/d in 2014. Natural gas pipeline gross imports, which have fallen over the past five years, are projected to fall by 0.3 Bcf/d in 2013 and then remain near 2013 levels in 2014. LNG imports are expected to remain at minimal levels of around 0.4 Bcf/d in both 2013 and 2014. [The U.S. will not begin exporting large amounts of LNG until the end of 2015. - Dan]
• As of September 27, working gas stocks totaled 3,487 Bcf, which is 155 Bcf less than at the same time last year, and 49 Bcf greater than the previous five-year (2008–12) average for that week. EIA projects inventories will total 3,830 Bcf at the end of the injection season, and 1,890 Bcf at the end of March 2014, the end of the winter heating season.
On the tropical weather front there are still two events in the Atlantic. Currently there is a medium probability of a weather event about 400 hundred miles southeast of the Cape Verde Islands. At the moment this system has a medium chance (40 percent) of further development over the next several days. Also there is a low probability (20 percent) event a few hundred miles south-southeast of Bermuda that is moving northward. Neither event is a threat to the Gulf Coast but they must be watched for the time being.
Based on the latest NOAA six to ten day and eight to fourteen day forecasts the eastern half of the USA is expecting above normal temperatures with the west coast expecting below normal temperatures through October 21st. During this period Nat Gas inventory injections should be normal versus both last year and the five year average. All signs continue to suggest that total Nat Gas inventories will be above normal ahead of the heart of the winter heating season.
From a technical perspective the market moved into another new, higher trading range with $3.68/mmbtu on the support side and $3.80/mmbtu on the resistance end. As mentioned above the market seems to be attempting to put in a technical, pre-winter bottom.
This week the EIA will release its inventory on Thursday, October 10rd at 10:30 am. This week I am projecting the injection level into inventory of 90 BCF. My projection for this week is based on a week that experienced more normal temperatures over a portion of the US than during the last month or so as the shoulder season begins to roll in but was impacted slightly by preventive shut-ins ahead of TS Karen. My projection compares to last year's net injection of 73 BCF and the normal five year net injection for the same week of 84 BCF. Bottom line the inventory deficit will narrow this week versus last year while the surplus compared to the so called normal five year average will widen if the actual numbers are in sync with my projections.
By Dominick Chirichella - Tue 08 Oct 2013 12:16:16 CT
Nat Gas prices have been in rally mode for the last two sessions with no strong reason for the surge (in my view). Market participants seemed to be focused on the changing weather patterns that should start to see some heating demand appearing over the next several weeks. Also the rally has been fueled from a technical perspective as prices failed several times to stay below the $3.50/mmbtu level after it breached this level on a post inventory report basis last week. The market may be starting to form a pre-winter heating season bottom.
Today the EIA released their latest Short term Energy Outlook and their Winter Forecast. Following are the main Nat Gas highlights.
• Under the baseline winter weather scenario, EIA expects end-of-October working gas inventories will total 3,830 billion cubic feet (Bcf) and end March 2014 at 1,890 Bcf. The projected 1,940 Bcf inventory drawdown during this winter is similar to the previous five-winters (October 2008 – March 2013) average of 1,940 Bcf.
• This year's Winter Fuels Outlook projects a drawdown of 2,340 Bcf in the cold-winter scenario (heating degree days 10% higher than projected), and 1,560 Bcf in the warm-winter scenario (10% fewer heating degree days). In the cold-winter scenario, storage inventories exit the heating season with a projected 1,450 Bcf at the end of March. However, this cold-winter scenario ending stock level is still higher than the average 1,271 Bcf end-of-winter stocks during the previous decade (2000-2009), reflecting increases in storage capacity as well as production over the last few years.
• EIA expects that natural gas consumption, which averaged 69.7 Bcf/d in 2012, will average 70.0 Bcf/d and 69.4 Bcf/d in 2013 and 2014, respectively. Colder winter temperatures in 2013 and 2014 (compared with the record-warm temperatures in 2012) are expected to increase the amount of natural gas used for residential and commercial space heating. However, the projected year-over-year increases in natural gas prices contribute to declines in natural gas used for electric power generation from 25.0 Bcf/d in 2012 to 22.1 Bcf/d in 2013 and 21.6 Bcf/d in 2014.
• Natural gas marketed production is projected to increase from 69.2 Bcf/d in 2012 to 70.0 Bcf/d in 2013 and to 70.4 Bcf/d in 2014. Natural gas pipeline gross imports, which have fallen over the past five years, are projected to fall by 0.3 Bcf/d in 2013 and then remain near 2013 levels in 2014. LNG imports are expected to remain at minimal levels of around 0.4 Bcf/d in both 2013 and 2014. [The U.S. will not begin exporting large amounts of LNG until the end of 2015. - Dan]
• As of September 27, working gas stocks totaled 3,487 Bcf, which is 155 Bcf less than at the same time last year, and 49 Bcf greater than the previous five-year (2008–12) average for that week. EIA projects inventories will total 3,830 Bcf at the end of the injection season, and 1,890 Bcf at the end of March 2014, the end of the winter heating season.
On the tropical weather front there are still two events in the Atlantic. Currently there is a medium probability of a weather event about 400 hundred miles southeast of the Cape Verde Islands. At the moment this system has a medium chance (40 percent) of further development over the next several days. Also there is a low probability (20 percent) event a few hundred miles south-southeast of Bermuda that is moving northward. Neither event is a threat to the Gulf Coast but they must be watched for the time being.
Based on the latest NOAA six to ten day and eight to fourteen day forecasts the eastern half of the USA is expecting above normal temperatures with the west coast expecting below normal temperatures through October 21st. During this period Nat Gas inventory injections should be normal versus both last year and the five year average. All signs continue to suggest that total Nat Gas inventories will be above normal ahead of the heart of the winter heating season.
From a technical perspective the market moved into another new, higher trading range with $3.68/mmbtu on the support side and $3.80/mmbtu on the resistance end. As mentioned above the market seems to be attempting to put in a technical, pre-winter bottom.
This week the EIA will release its inventory on Thursday, October 10rd at 10:30 am. This week I am projecting the injection level into inventory of 90 BCF. My projection for this week is based on a week that experienced more normal temperatures over a portion of the US than during the last month or so as the shoulder season begins to roll in but was impacted slightly by preventive shut-ins ahead of TS Karen. My projection compares to last year's net injection of 73 BCF and the normal five year net injection for the same week of 84 BCF. Bottom line the inventory deficit will narrow this week versus last year while the surplus compared to the so called normal five year average will widen if the actual numbers are in sync with my projections.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group