Energy Prospectus

Working gas in storage was 2,092 Bcf as of Friday, March 17, 2017, according to EIA estimates. This represents a net decrease of 150 Bcf from the previous week. Stocks were 399 Bcf less than last year at this time and 266 Bcf above the five-year average of 1,826 Bcf. At 2,092 Bcf, total working gas is within the five-year historical range.

The 150 Bcf draw compares to the 5-year average for this week of 17 Bcf. Thank you Mother Nature!

We will have two more weekly draws before refill season begins. MY SWAG is that they add to ~50 Bcf, so winter heating season will end with ~2,040 Bcf in storage. This compares to ending storage last year of 2,480 Bcf.

Refilling storage is part of demand and it happens April to October (214 days). So, the difference to last year adds ~2.0 Bcf per day of additional demand for natural gas over the next seven months.

Market data provider PointLogic reported that weekly US dry natural gas production was flat at 70.5 Bcf (billion cubic feet) per day from March 9–15, 2017. Dry natural gas production fell 3.7% from the same period in 2016.

The EIA estimates that monthly US dry natural gas production peaked at 76.8 Bcf per day in July 2015—the highest level ever. In contrast, production hit 71.5 Bcf per day in June 2016. It was the lowest natural gas production figure since June 2014.

The EIA estimates that US dry natural gas production could average 73.7 Bcf per day in 2017 and 77.8 Bcf per day in 2018. US dry natural gas production averaged 72.3 Bcf per day in 2016 and 74.1 Bcf per day in 2015. In 2016, US natural gas production fell for the first time since 2005.

Higher demand for exports and to refill storage will add to steadily increasing industrial, residential and power generation demand for gas. We have a MUCH TIGHTER U.S. natural gas market today than we did at this point last year.

You indicate there will be 2 Bcf per day more demand to refill storage to last year's level yet it appears it will take a Bcf less per day to refill to the 5 year average. Not sure there is really extra demand as a result of current above 5 year storage levels. Your comments on this...

It will take 2 BCF more gas to refill storage from April to October compared to last year. The 2015-2016 winter was super warm and the lack of demand to refill storage masked what otherwise would have been a tight U.S. gas market in 2016. U.S. production is down and demand for gas keeps going up. A pretty good recipe to higher prices.