Natural Gas Wednesday
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Started by metmike - Aug. 8, 2018, 10:17 a.m.

For weather that effects the natural gas market(Cooling Degree Days in the Summer help gauge residential natural gas use because natural gas is used to generate electricity for air conditioning:

By metmike - Aug. 8, 2018, 10:29 a.m.
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From Natural Gas Intelligence Wednesday Morning:


September Hits $2.91 Ahead of Market Open

     9:01 AM    

September natural gas prices remained in positive territory ahead of Wednesday’s market open, trading up 1.3 cents at $2.91 with no major changes in the latest weather guidance.

By metmike - Aug. 8, 2018, 10:30 a.m.
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Storage is LOW for this time of year!! This is why the temperature forecast matters. 

Storage is at the very bottom of the 5 year average:

Working Gas in Underground Storage Compared with Five-Year Range

By metmike - Aug. 8, 2018, 10:31 a.m.
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Storage +35 Billion Cubic Feet-Bullish last Thursday for the 3rd straight week!                                                                                                                                                                       

     Heat in the West to TX caused drawdowns in the Pacific and South Central regions.                                                                                                                               

Working gas in underground storage, Lower 48 states Summary textCSVJSN
  Historical Comparisons
billion cubic feet (Bcf)
 Year ago
5-year average
Region07/27/1807/20/18net changeimplied flow  Bcf% change Bcf% change
East552  527  25  25   647  -14.7  650  -15.1  
Midwest552  524  28  28   752  -26.6  707  -21.9  
Mountain146  145  1  1   200  -27.0  178  -18.0  
Pacific250  257  -7  -7   293  -14.7  313  -20.1  
South Central808  820  -12  -12   1,104  -26.8  1,025  -21.2  
   Salt203  214  -11  -11   298  -31.9  279  -27.2  
   Nonsalt604  606  -2  -2   806  -25.1  746  -19.0  
Total2,308  2,273  35  35   2,996  -23.0  2,873  -19.7  

Prior to the report, consensus had settled around a build in the low 40 Bcf range, in line with the five-year average. Kyle Cooper of IAF Advisors had projected a 40 Bcf build, while Genscape Inc. expected a 45 Bcf injection. A Bloomberg survey had a range between 25 Bcf and 58 Bcf, with the median response of survey participants coming in at 43 Bcf. Intercontinental Exchange settled at 43 Bcf. 

The EIA’s reported 35 Bcf build was 5 Bcf below projections by Bespoke Weather Services, which said “today’s print continues to demonstrate a tight market (albeit one that has loosened slightly from last week’s print). 

By metmike - Aug. 8, 2018, 10:31 a.m.
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These were the temperatures for the 7 day period for that last EIA in the West to TX..........much cooler than the previous week, especially Midwest..... so a bigger injection was expected.

By metmike - Aug. 8, 2018, 10:32 a.m.
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With 3 bullish(low) injections in a row and low storage, expectations and reactions to this coming  Thursday's EIA number will be a huge factor for trading this week. 

One way to estimate that number is to look at temperatures that occurred during the 7 day period covered for this next report and compare them to the temps from the last report(above) which featured a +35 bcf injection. Here they are:

By metmike - Aug. 8, 2018, 10:32 a.m.
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Here they are on the same page to have a better close up comparison. The first 2 maps are the temps/departure for last weeks +35 bcf. The 2nd 2 maps are the temps/departure for this weeks number.

By metmike - Aug. 8, 2018, 10:33 a.m.
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Natural gas breaking out to the upside. Got some tough resistance ahead but storage data is bullish(expections for big increases in  supplies coming soon are bearish):

Natural gas 3 months

Naturalgas 1 year below

Naturalgas 5 years below


Naturalgas10years below                
By metmike - Aug. 8, 2018, 10:34 a.m.
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Seasonals based on historical prices.

Erdgas Future saisonal

By metmike - Aug. 8, 2018, 10:34 a.m.
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By WxFollower - Aug. 2, 2018, 4:03 p.m.            

             Today's EIA of +35 was, as noted by Mike, quite bullish. That includes in relation to the DJ news survey average, which had +44. So, it was a 9 bcf bullish miss for that. The prior two were also quite bullish with bullish misses of 10 bcf last week and 12 bcf the week before. One miss of 9 bcf is notable but I normally don't put too much weight on it for the longer term because of the chance of it being due to a statistical anomaly. However, three 9+ misses in a row in the same direction is very notable and significantly lessens the chance that there's merely a statistical anomaly.

 When was the last times there were three weeks in a row that missed the DJ News survey average  by 9+ bcf on the bullish side? Way back in November of 2011!  Here is the data:

Week ending 11/11/11: actual missed 15 bcf to the bullish side

Week ending 11/18/11: actual missed 10.5  bcf to the bullish side

Week ending 11/25/11: actual missed  11 bcf to the bullish side


                By WxFollower - Aug. 3, 2018, 12:31 p.m.            


Hey Mike et al,

 The semi-reliable/decent skill ensemble model consensus (GFS and Euro) for 0Z today vs 0Z yesterday was a few CDDs hotter for weeks 1 & 2, combined. That was enough when combined with follow through from yesterday's solidly bullish EIA to cause a pretty good rally this morning on top of yesterday's pretty strong rally on the EIA report, itself. The CFS is, as you showed, significantly cooler weeks 3-4 vs yesterday. The market didn't care much, if any, about it as it stayed strong. That model often bounces around like a ping pong ball like it has in recent days and is, therefore, hard for the market to take seriously most of the time. Also, it has a significant cool bias. As mentioned a few days ago, 30 year climatology is actually more accurate than the CFS by day 10! The market rallied on the slightly hotter much more reliable weeks 1-2 guidance and essentially ignored the cooler "entertainment" shown for weeks 3-4.

 Now let's see what the 12Z model consensus will show.

By the way, thanks, Mike for all that you do at this board! You're awesome!


                By metmike - Aug. 3, 2018, 10:58 p.m.            

            You're welcome Larry!

Am wondering if industrial demand is a bit stronger than expected and part of the increased demand that is causing these bullish surprises on the EIA storage reports.

I have not analyzed what regions are the most bullish with regards to guesses and don't know if its been consistently the same region(s) that are using up more gas than expected.

We have been having drawdowns in the Southcentral and Pacific regions because of the intense heat from Texas to the West but the storage injection guessers have all known what the CDD's have been in the entire US for the past 3 weeks and would have dialed in the appropriate numbers, weighted for population in those areas....but we had bullish surprises in each of those weeks.

I remember in late 2008 and especially early in 2009, we were having some pretty bearish(smallish) drawdowns for the amount of HDD's because of sluggish demand in the industrial sector as a result of the big economic slowdown.

It would make sense, right now if the opposite is happening............industrial demand for natural gas ramping up with the economy roaring. What do you think Larry?

Supplies have increased significantly. According to most accounts, supplies coming to the market have been setting records recently. Expectations for this growth to continue are what's keeping a lid on prices..........which should be at $3, based on previously/past low storage and forecast heat coming up.


                By WxFollower - Aug. 5, 2018, 11:05 p.m.            



 To answer your Q: slightly cooler Midwest, SE, TX, and Rockies. Near the same in NE US and west coast states. Going on memory, nationally weighted CDDs are down around 4 to near 79 vs prior week.


                By WxFollower - Aug. 5, 2018, 11:47 p.m.            



  You're welcome. However, I remembered incorrectly. The latest week's CDDs were actually at 76 rather than at 79. So, that means a drop of 7 CDDs from last week's 83 rather than just a 4 CDD drop.


                By WxFollower - Aug. 6, 2018, 5:51 p.m.            


 I believe the idea that NG was down early on cooler 2 week models/forecasts vs Friday and vs Sunday. The bulk of this was for the period 8/13-16 or early week 2. However, regarding the later morning  rise, I don’t think that was wx related but rather probably related to leftover bullishness from the 3 prior EIA reports and the related persistent storage deficits. Also, I had the 12Z models as mixed, a neutral signal.


                  By metmike - Aug. 6, 2018, 6:38 p.m.                                                   

Thanks Larry,

Interesting how we like to guess what caused natural gas to move the way it did.

Models were not as warm today as they were Friday, so certainly one would think the weather was less bullish.............and that was a good reason for ng to be lower overnight and during part of the morning. 

A few weeks ago, a forecast with less heat might have kept the selling pressure on but the mentality may have changed because of 3 bullish EIA reports in a row. 

So we held Friday's lows(actually during the overnight session on Thursday Night), which provided enough support. 

The 12z GFS was cooler overall and that caused a bit of a dip before noon when it was coming out but we continue to see support being bought now.....with a different the dips, instead of sell the bounces.

Question is will we get above Friday's highs? After looking at the charts again, it seems like the question might be WHEN will we break higher?

If the models turn decisively hotter, then that seems like a no brainer. If we morph to gradually cooler, will this tough resistance hold?

Looks like cash prices are well above $3 with the current heat as low storage is effecting it.  The front month, Sept is battling to stay down. 


                By Jim_M - Aug. 7, 2018, 1:54 p.m.            


With NG 700BCF behind last year, I cannot for the life of me, think of a single reason to be short.  Goodness.....we would have to have well over 100 bcf injections until November and I don't know that would be enough to catch up to last year.

Long and waiting for the first Gulf hurricane.  



                By metmike - Aug. 7, 2018, 2:02 p.m.            


Me too Jim. 

Looks like we may take out the highs resistance 2.906

After 2.906 there is alot of open area above. 

However, ng has struggled at resistance enough this year and it ended up holding to make me cautious. 


                By metmike - Aug. 7, 2018, 2:10 p.m.            


The 3 consecutive bullish EIA reports, low storage and upcoming Winter, with not nearly enough time to refill  close to the 5 year average, along with seasonals and a technical upside breakout "might" finally push us substantively higher.

Dial in forecasts that are adding heat again and you have bullishness from all over the place.

The trade, which had been selling every rally/bounce looks to have shifted and is now buying every dip. 

By metmike - Aug. 8, 2018, 10:39 a.m.
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Short-Term Energy Outlook from the Energy Information Administration:


            Release Date: August 7, 2018 |             Next Release Date: September 11, 2018 |

Natural Gas


  • EIA estimates dry natural gas production was 81.8 billion cubic feet per day (Bcf/d) in July, up 0.4 Bcf/d from June. EIA forecasts dry natural gas production will average 81.1 Bcf/d in 2018, up by 7.5 Bcf/d from 2017 and establishing a new record high. EIA expects natural gas production will rise again in 2019 to 84.1 Bcf/d. 
  • EIA forecasts that pipeline exports of natural gas, which averaged 6.7 Bcf/d in 2017, will average 7.0 Bcf/d in 2018 and 8.5 Bcf/d in 2019. Increasing natural gas production in the United States and the completion of new pipelines that carry U.S. natural gas to demand centers in Mexico contribute to the expected increase. In June, two new pipelines in Mexico were placed in service that will distribute natural gas from the United States to destinations in Mexico. In addition, EIA forecasts exports of liquefied natural gas (LNG) rise from 1.9 Bcf/d in 2017 to 3.0 Bcf/d in 2018 and to 5.1 Bcf/d in 2019. This growth contributes to U.S. net exports of natural gas averaging 2.0 Bcf/d in 2018 and 5.4 Bcf/d in 2019, compared with 0.3 Bcf/d in 2017. 
  • EIA expects Henry Hub natural gas spot prices to average $2.96/million British thermal units (MMBtu) in 2018 and $3.10/MMBtu in 2019. NYMEX futures and options contract values for November 2018 delivery that traded during the five-day period ending August 2, 2018, suggest a range of $2.33/MMBtu to $3.48/MMBtu encompasses the market expectation for November Henry Hub natural gas prices at the 95% confidence level.