Energy Prospectus

Working gas in storage was 3,437 Bcf as of Friday, September 2, 2016, according to EIA estimates. This represents a net increase of 36 Bcf from the previous week. Stocks were 196 Bcf higher than last year at this time and 306 Bcf above the five-year average of 3,131 Bcf. At 3,437 Bcf, total working gas is above the five-year historical range.

The 36 Bcf net increase compares to the 5-yr average for this week of 63 Bcf.

This marks the 18th week in a row that net increases in natural gas storage have been significantly below the 5-year average. During the 18 weeks the total difference has been 533 Bcf, an average of 29.6 Bcf lower per week.

There are ten more weeks left in the refill season before the winter heating season begins. If we stay on this path, the difference to the 5-year average will be wiped out. Gas in storage should be ~3,850 Bcf when winter heating season begins.

This is bullish for natural gas prices. The U.S. consumes a lot more gas per day than it did five years ago. About 8 Bcf per day more when you include exports and we cannot count on Canadian gas coming to the rescue since their production has decline as well.

Joe Bastardi's winter weather forecast is now available at the link below. La Nina has replaced El Nino in the central Pacific ocean. La Nina winters are colder in the eastern half of the U.S., which is bullish for natural gas and NGL prices.

http://www.weatherbell.com/premium/

OilPrice.com: "U.S. natural gas production declines. Four consecutive months of declining natural gas production raises the prospect of a much tighter market than previously anticipated. While gas inventories are still at a record high for this time of year, they have been rising much slower than expected and even declining at times this summer. As the WSJ notes, one extremely cold winter could erase the supply surplus and push up natural gas prices. Higher natural gas prices would affect an array of industries, including power generation, petrochemical production, and other industries that use gas as an input."