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Natural Gas Supply/Demand and Price
Posted: Mon May 04, 2015 11:24 am
by dan_s
Read what I have to say about natural gas in the newsletter. Here is more on the subject.
http://marketrealist.com/2015/05/natura ... per-mmbtu/
All of my forecast models assume $2.50/mcf for Q2 and Q3 and $3.00/mcf for Q4. With a hot summer, we could see higher prices by year-end. 2016 looks a lot better for natural gas prices.
Re: Natural Gas Supply/Demand and Price
Posted: Mon May 04, 2015 3:53 pm
by dan_s
From my PLS newsletter dated May 4:
Demand (for natural gas) is helping offset the flood of gas somewhat. US consumption is up 8% YOY, according to Bentek, and, including exports, total demand is up 9%. Power is driving much of this increase, up 16% YOY, while heating demand is shoring up the remainder with an 8% YOY increase. Meanwhile, industrial demand is up about 1%. Heating has provided a near-term boost, jumping 18% vs. the prior week in the latest data as recent weather came in colder than normal in many key gas-consuming regions. Exports to Mexico are also rising nicely, up 30% YOY.
Switching is expected to be a significant factor this summer, not only from coal but also expected diminished hydro capacity in the drought-stricken West. EIA estimates that gas consumption for power use this summer will average 26.7 Bcf/d, just shy of 2012’s record 27.9 Bcf/d driven by low prices and expected warmer than normal temps. That said, Global Hunter expressed concerns that an El Nino variant could prevent summer temps from getting sufficiently hot to merit significant power switching.
Temperatures in recent weeks have trended warmer than normal, coming in above seasonal averages each reporting week of the past four and for the most part running higher by low- to mid-single digit percentages. Mild to warmer temperatures should persist for the next few weeks. NOAA foresees warmer than normal temps in much of the country under its 6-10 day outlook, while the desert southwest should run cooler than normal. Under the 8-14 day view, the previously warmer eastern half of the country should moderate toward norms, while desert cool remains. Given traditionally mild early May weather, these forecasts suggest typical shoulder season bearishness could be on the way.