Energy Prospectus

Working gas in storage was 3,041 Bcf as of Friday, June 10, 2016, according to EIA estimates. This represents a net increase of 69 Bcf from the previous week. Stocks were 633 Bcf higher than last year at this time and 704 Bcf above the five-year average of 2,337 Bcf. At 3,041 Bcf, total working gas is above the five-year historical range.

I expect the weekly increases in storage levels to decline by 5-10 bcf per week through the summer. We may see a zero increase by the end of July or early August. Storage level by the end of the next winter heating season should be close to the 5-year average.

The 69 Bcf build compares to the 5-year average of 86 Bcf. Increases in storage have been well below the 5-year average for the last six weeks.

To see a table of the weekly storage level changes, go to http://www.americanoilman.com/

Andy Weissman (EBW Analytics Group) on Natural Gas Prices:

Many market observers are incorrectly discounting the sharp increase (in natural gas prices) as a technically fueled rally. It isn't. Instead, tightening supply/demand fundamentals – both falling supply and rising demand – are likely to lift NYMEX natural gas futures substantially throughout 2016. The same pattern occurred four years ago. Both 2016 and 2012 had extremely bearish preceding winters, both saw end-of-March storage exit within a hair of 2,475 Bcf, and both saw NYMEX prices below $2.00/MMBtu.

In 2012 prices rose as the market recognized it had overreacted to the previous winter's bearishness. Our analysis shows that natural gas is headed in a similar direction in 2016.