Energy Prospectus

At 1/15/2016 the natural gas in U.S. storage was 3,297 BCF.

To get back to the 5-year average by 3/31/2016, weekly draws need to average 153 BCF for the next eleven weeks. That is not going to happen, BUT with a MAJOR blast of Artic air coming around the 10th of February (see Dr. Joe Bastardi's 1/26 update at http://www.weatherbell.com/ ) there is a good chance ending storage ends up below 2,000 BCF. That should be low enough to support at least decent gas prices this year.

Back in December, I saw some forecasts of storage staying above 3,000 BCF this winter. Those reports were from analysts that drink the Global Warming cool aid.

Super El Nino winters start warm in December, but then tend to be cold and wet. Dr. Bastardi has been forecasting several major winter storms for this winter since August. We've had one and the next one is on the way. Not as much snow this time, but cold deeper south.

The ending storage level is very important. Refilling of the storage before the next winter heating season is a big part of demand during the summer months. Without it, we would see gas-on-gas competition for storage and that can get down right nasty.

Natural gas production is on decline and demand goes up each year. This year we have more export demand.

Assuming you are spot on, approximately when might gas prices peak?

You all need to listen to Joe's 1/27 update at: http://www.weatherbell.com/

To your question: Natural gas prices will move higher when it is clear that North American supply / demand are heading back into balance. A very cold February will help, but gas in storage will remain above the 5-year average and keep a lid on gas prices. I now expect the price to remain over $2.00/mmbtu and we should see the price track back to $3.00/mmbtu this year.

Super El Nino years are followed by several La Nina years. La Nina's normally see more hurricanes in the Gulf of Mexico that could disrupt gas supplies.

I will have more on this in Friday's edition of The View From Houston.