Energy Prospectus

Go to http://www.weatherbell.com/ and listen to the 1/13 Update.

In the last two weeks I have received several analysts reports that primarily focus on oil prices. However, they all seem to be convinced that the warm El Nino winter will continue in Q1 which would result in a lot of gas remaining in storage when the heating season ends in early April. Obviously, the weather pattern has changed and Dr. Joe Bastardi is holding firm with his forecast that mid-January through February will be VERY COLD in the eastern half of the United States.

If Joe is right, we could see some BIG draws from natural gas storage.

One analysts report said natural gas storage could be near 3 TCF at the end of March. I can assure you that is not going to happen. Storage will be near 3 TCF by the end of January and if Joe is right it will be near 2.2 TCF by the end of February. The 5-year average storage level at the end of the heating season is 1.6 TCF. This sounds like a lot, but "base load" is around 1.0 TCF.

In rural areas a lot of people burn propane to heat their homes. The pattern of the storm coming this weekend is right through an area that consumes a lot of propane for heating. The pattern is very bullish for propane demand. If propane prices increase it will help a lot of our model portfolio companies. Propane is a high percentage of NGLs.

This is a Missouri market, the Show Me State. I think we are going to see some big draws from natural gas storage that should draw more attention. Keep in mind that gas storage is way over the 5-year average, so we have some work to do.

I want to be clear. I do not think gas is going back to $4.00/mcf. I just think the gas market is going to be much tighter than a lot of analysts think it will be at the end of the heating season.

Today, there are not enough rigs drilling for gas to keep production from falling.

I just looked at the NE Ohio forecast for those days - and yes it is cold. However - this cold is far more normal than not for January. Last year we were getting big negative numbers - not just low teen numbers.

This cold is preventing a complete NG disaster - but is still warm in comparison to the last two years.

Bob

well, if bastardy was correct we would see a lot of blue on this map---but it is red red red. bastardi have anything to say about it today?

http://www.cpc.ncep.noaa.gov/products/p ... /index.php

You need to listen to his Saturday Update at: http://www.weatherbell.com/

Joe is still forecasting colder than normal for SE quarter of U.S. in February and March.

To see this week's temps., go to this website: http://www.wunderground.com/ndfdimage/v ... &region=us

Scroll through each day and I think you will agree it is going to be a week were a lot of natural gas is drawn from storage for space heating.