Natural Gas Storage Report - Sept 22

[dan_s]

Working gas in storage was 3,551 Bcf as of Friday, September 16, 2016, according to EIA estimates. This represents a net increase of 52 Bcf from the previous week. Stocks were 140 Bcf higher than last year at this time and 268 Bcf above the five-year average of 3,283 Bcf. At 3,551 Bcf, total working gas is above the five-year historical range.

The 52 Bcf increase in storage compares to the 5-year average increase for this week of 83 Bcf. < This is the 20th week in a row that the net increase in storage has been below the 5-yr ave.

Over the last 20 weeks the surplus to the 5-yr average has declined by 570 Bcf, 28.5 Bcf per week. That is a HUGE difference and clearly shows the rapidly tightening U.S. gas market.

There are 8 weeks left in the refill season. 8 X 28.5 = 228 Bcf.
> This means we are likely to begin the winter heating season with less gas in storage than we had last year.
> This means the difference to the 5-year average will be razor thin.

BTW the 28.5 Bcf difference to the 5-year average will not stop in 8 weeks. U.S. gas production is down over ~3 bcf per day and demand is up ~2.5 Bcf per day.

What do you think gas prices will do this winter if the draws from storage are 28.5 Bcf per week higher than the 5-year average?????????????????????

Time to add more exposure to gas to your portfolio.

[dan_s]

Watch today's daily update at http://www.weatherbell.com/premium/ Joe explains why summer temps will last well into October and then switch to a cold pattern. Very bullish for natural gas.

[dan_s]

5-year average injections for the remaining 8 weeks of refill season:

Week ending Injection
Sept 23 --------- 97 Bcf
Sept 30 --------- 96 Bcf
Oct 7 ----------- 93 Bcf
Oct 14 ---------- 82 Bcf
Oct 21 ---------- 79 Bcf
Oct 28 ---------- 65 Bcf
Nov 4 ----------- 38 Bcf
Nov 11 ---------- 2 Bcf < Draws from storage usually start the 3rd week of November, but they may start a week early this year.

My SWAG is that actual injections will be much lower than the 5-year average because (a) production has fallen, (b) demand has increased and (c) a very bullish weather pattern has developed as summer temps are expected in the eastern third of the U.S. well into October. See Joe's daily update at http://www.weatherbell.com/premium/

[dan_s]

Wall Street starting to see what's coming: Stifel (9-22-2016): "For Henry Hub, we are raising our 4Q16 to 4Q17 outlook by $0.25/MMBtu and, in turn, are raising our FY17 average price to $3.35/MMBtu from $3.10/MMBtu."

All of my forecast models assume $3.25/MMBtu for 2017.