Natural Gas Storage Report - August 14

[dan_s]

Working gas in storage was 2,467 Bcf as of Friday, August 8, 2014, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 530 Bcf less than last year at this time and 575 Bcf below the 5-year average of 3,042 Bcf.

We should see smaller increases the next few weeks as heat spreads across the South. Weather forecast for early September is now mildly bullish for natural gas prices. Our gas fired power plants suck up a lot of gas when everyone runs the AC day and night.

My SWAG remains the same: We will begin next winter with ~3,500 BCF in storage (over 300 BCF below where we started last winter). If so, and the forecast for winter is similar to last year's COLD winter, then we may see ngas prices pushing $5.00 by year-end. Today the forecast is for a COLD winter with heavier snow deep into the South. Keep in mind that a very high percentage of homes in the "South" heat with natural gas.

Keep your portfolios heavily weighted to oil. We have enough exposure to natural gas with XEC, DVN, EOG, GPOR, NFX, RRC, SM and UNT. SM is a great example of a "Smart Way" to invest in natural gas. CRK is also a good choice.