Natural Gas Storage Report - June 9

[dan_s]

Working gas in storage was 2,972 Bcf as of Friday, June 3, 2016, according to EIA estimates. This represents a net increase of 65 Bcf from the previous week. Stocks were 660 Bcf higher than last year at this time and 722 Bcf above the five-year average of 2,250 Bcf. At 2,972 Bcf, total working gas is above the five-year historical range.

The 5-year average storage build for this week is 94 Bcf.

We should begin to see smaller storage builds starting next week as demand for power generation and exports ramps up. I expect storage levels to build to 4,000 to 4,100 Bcf by mid-November when the next heating season begins. That is high, but not ridiculously high. A normal (La Nina) winter should push gas prices over $3.50/mmbtu. The January, 2017 NYMEX contract for natural gas is currently trading for $3.28/mmbtu.

Some analysts predict that we could see weekly injections go to zero in July & August. If that should happen, we could see natural gas prices move a lot higher. Wouldn't that be a nice surprise!

My Top Picks for "gassers" are AR, GPOR and RRC. SM Energy (SM) will also get a nice revenue boost from increasing gas prices. All of our model portfolio companies produce some gas.

[dan_s]

Updated profiles for AR, GPOR, RRC, SM and all of our Sweet 16 can be downloaded from the EPG website.