Energy Prospectus

Working gas in storage was 896 Bcf as of Friday, March 21, 2014, according to EIA estimates. This represents a net decline of 57 Bcf from the previous week. Stocks were 899 Bcf less than last year at this time and 926 Bcf below the 5-year average of 1,822 Bcf.

Next week should be the last big draw from storage. Looks like storage on March 31st will be less than 840 bcf, which means the U.S. took over 3,000 bcf out of storage to meet demand last winter.

EIA is now forecasting that 2,500 bcf will be put back into storage this refill season, so they think we will start next winter at less than 3,400 bcf. That will put several areas at risk of running out next winter.

The thing to watch in April and May is how refill season starts. If early injections are small, compressing refill season, then the bidding war for gas supply will begin. Remember, utilities do not care how much they have to pay for gas. They MUST have enough gas to meet consumer demand. They CANNOT let pressure in the residential lines go down. In NYC area the utilities paid over $100/mcf on the spot market to avoid a pressure drop a couple months ago.

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BTW: A refill of 2,500 bcf would be a new record. If we have a "normal" summer, it will be difficult to hit that mark.

robry already has next week as -71 with two days to go. so i expect we will end season less than 800.

The front month contract is up 14 cents today, but that is not the point. A spike in gas prices at the end of March is very unlikely ANYTIME. The reason is that Q2 is the lowest demand quarter of the year.

The point I was making is that if refill season starts slowly, then it is going to get very interesting for Ngas in a couple months. If March ends with storage under 800 bcf that means we will have a hard time getting back to 3,300 bcf by start of next winter. That ain't enough!!!!!!!!!!!!!!!!!

A few points to consider:
> U.S. (and Canadian) storage levels on March 31 will be lowest in more than ten years.
> U.S. gas demand is a heck of a lot higher today than it was ten years ago. The U.S. is estimated to consume 27.5 TCF this year and demand is going up year-after-year. See chart attached.
> It will take a record refill season to get back to 3,500 bcf in storage before next winter, which is the minimum to make it through a normal winter.
> All of the Big Three dry gas shale plays (Barnett, Fayetteville and Haynesville) are on decline
> Gulf of Mexico gas is on decline
> Imports from Canada will be down (they have to refill their own storage)
> Gas demand in 2014 will be at least 1.5 bcf per day higher than 2013

So, the big question is will the "associated gas" from the Eagle Ford, Bakken and Permian Basin be enough? Marcellus and Utica shales are increasing production this year.

Again, Q2 gas prices will not be impacted (much). I am looking beyond the next 90 days. If storage is still way below the 5-year average on June 30th concerns will grow that storage will not be high enough by the time next winter heating season rolls around. Then the utilities will start a "bidding war" for supply.

Read this: https://rbnenergy.com/should-i-store-or ... ion-season