Energy Prospectus

Working gas in storage was 3,597 Bcf as of Friday, December 16, 2016, according to EIA estimates. This represents a net decline of 209 Bcf from the previous week. Stocks were 226 Bcf less than last year at this time and 78 Bcf above the five-year average of 3,519 Bcf. At 3,597 Bcf, total working gas is within the five-year historical range.

This all but guarantees that the surplus to the 5-year average will be wiped out with next week's storage report. If so, gas in storage falling below the 5-year average is coming a month before I expected it to happen.

The 5-year average draws from storage for the last two weeks of December:
> For the week ending 12/23 = -82 BCF
> For the week ending 12/30 = -127 BCF

The net decline in storage for the week ending 12/23/2016 should be 200 to 250 BCF. If it is at the top of that range, I think ngas prices will push over $4.00 in January. The February NYMEX contract is now trading around $3.60/MMBtu.

Go to the CME Group website ( http://www.cmegroup.com/trading/energy/ ... l-gas.html ) and you can watch real-time trading of the NYMEX ngas futures. You can see how the speculators play these weekly storage reports.

They buy ahead of the weekly report, which comes out at 10:30 AM ET and close their positions right after the report comes out. What they probably do is tighten up their stop-loss orders right before the report is released. This is why you often see a bit of a pull-back even after a bullish report, like the one we had today. It usually takes only 5-10 minutes before the price stabilizes.

There are a lot of good charts on the CME Group website, so make it one of your favorites.

Higher natural gas and NGL prices will help all of our model portfolio companies. You can see their production mix at the bottom of each forecast model.