Energy Prospectus

A MAJOR change in the weather pattern is coming to the U.S. in mid-November. Go to http://www.weatherbell.com/premium/ and watch the 10/28 Daily Update. If Dr. Bastardi is right, we should see natural gas move over $3.50 by the end of November and test $4.00 by the end of December.

We are going to begin the winter heating season with approximately the same amount of gas in storage that we had a year ago. However, gas SUPPLY / DEMAND is approximately 4 Bcf per day tighter this year. Over the last six weeks of 2015 the draws from storage were quite a bit below the 5-year average, which lead to crashing gas prices in the 1st quarter of 2016. This winter we should see much higher draws from storage over the last six weeks of 2016. If so, natural gas and NGL prices should move higher.

Propane prices were also depressed by the warm winter last year. Propane is used by many home owners in the Midwest for space heating and cooking. Higher demand for propane this winter will do wonders for NGL prices.

I show each company's production mix (natural gas, crude oil and NGLs) at the bottom of their forecast models. It is extremely important that you know the production mix of each company in your portfolio.

I will simply post additional data.

http://www.intellicast.com/National/Tem ... ure30.aspx

Go to http://www.weatherbell.com/premium/ and watch the November 1 Daily Update. Joe explains why the U.S. model is missing what he believes will be a major change in the weather pattern November 15-20.

Joe many be wrong, but I have seen many times where he predicts something that the U.S. weather services miss until a few days later.

Let me be crystal clear about this. WE DO NOT NEED A COLDER THAN NORMAL WINTER TO GET A MUCH TIGHTER U.S. NATURAL GAS MARKET IN 2017. U.S. gas production is down over 2 Bcf per day and U.S. demand (including exports) is up over 2 Bcf per day compared to last year.

There are three primary drivers of natural gas demand in the U.S. market. Industrial demand and power plant demand (electricity generation) are bigger than space heating demand. It is just that all of the space heating demand comes December-March causing a big chance in the daily demand.

The first half of November is going to be warmer than the second half of the month. Doesn't take a rocket scientist to make that statement. A warmer than normal first half of November may result in 20-30 Bcf more gas being put into storage, which is no big deal. The weather patter that Joe is forecasting for the second half of the month could draw 100 Bcf more from storage than last year during the same period. That's because the difference between 50 & 60 degree days in the first half will have very little impact on heating demand. The difference between 40 & 30 in the second half will have a big impact.

Read the article from Robert Rapier that was sent out via e-mail yesterday.