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:
From Natural Gas Intelligence:
September Natural Gas Called Close to Even as Forecasts, Deficits Supportive
8:54 AM
September natural gas futures were set to open Wednesday close to even at around $2.971/MMBtu, holding onto most of the prior day’s gains as hot weather and storage deficits remain supportive for prices.
metmike: They missed the big model changes and cooler weather on the GFS and European operational model.
Storage is Very Low for this time of year!! This is why the temperature forecast matters.
Storage is just below the bottom of the previous 5 year range and also almost 700 bcf below last year at this time!
From from last Thursday:
EIA +33 bcf a bit bearish!
| Working gas in underground storage, Lower 48 states Summary textCSVJSN | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical Comparisons | |||||||||||||||||||||||||
| Stocks billion cubic feet (Bcf) | Year ago (08/10/17) | 5-year average (2013-17) | |||||||||||||||||||||||
| Region | 08/10/18 | 08/03/18 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
| East | 592 | 575 | 17 | 17 | 697 | -15.1 | 694 | -14.7 | |||||||||||||||||
| Midwest | 603 | 579 | 24 | 24 | 794 | -24.1 | 759 | -20.6 | |||||||||||||||||
| Mountain | 151 | 148 | 3 | 3 | 204 | -26.0 | 183 | -17.5 | |||||||||||||||||
| Pacific | 240 | 245 | -5 | -5 | 292 | -17.8 | 320 | -25.0 | |||||||||||||||||
| South Central | 801 | 807 | -6 | -6 | 1,088 | -26.4 | 1,026 | -21.9 | |||||||||||||||||
| Salt | 190 | 200 | -10 | -10 | 284 | -33.1 | 271 | -29.9 | |||||||||||||||||
| Nonsalt | 610 | 607 | 3 | 3 | 804 | -24.1 | 755 | -19.2 | |||||||||||||||||
| Total | 2,387 | 2,354 | 33 | 33 | 3,074 | -22.3 | 2,982 | -20.0 | |||||||||||||||||
Maps for that report below.
Below are the temperatures that will count for this coming Thursday's' EIA report:
And I "pre"forecast it!! LOL
Holding puts
Natural gas has hit some tough resistance(with an expected increase in supplies coming soon.....offset with coming heat). Storage data last Thursday was a bit bearish, after being neutral the week before and bullish the previous 3 weeks.
It would be a MAJOR upside breakout to close above $3. If we can't do it, then it could be a top. Low storage and late August heat are the bullish factors.
| Natural gas 3 months |
Naturalgas 1 year below
Naturalgas 5 years below
| Naturalgas10years below
|
Seasonals based on historical prices.
Previous comments from last week:
By Jim_M - Aug. 16, 2018, 10:35 a.m.
Buying opportunity. it's 100bcf below what it will take to catch up to last year and get up to the 5 year average.
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By WxFollower - Aug. 16, 2018, 11:52 a.m.
I agree with Mike. It was already down before the report due imo to a cooler mainly Euro ensemble. The GFS suites have been more volatile...so I consider them more neutral. Perhaps the 12Z runs will provide shed more light on which of the two suites has a better clue?
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By Jim_M - Aug. 16, 2018, 12:04 p.m.
Sounds like the cattle mantra. "There is all this supply coming online", but yet, the price keeps going up and cattle supply is slightly around historical averages.
Historically, NG is strong this time of year. Injections are not impressive at all. A couple of bcf above predictions is bullish verses projections. That we lost ground to last year is not. We are WAY behind in all categories of storage. Day to day there might be some downside due to weather, but to my way of thinking we are in a precarious position.
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By patrick - Aug. 16, 2018, 12:38 p.m.
I don't see the storage numbers as that bad. The last 5 years at 3600-4000 max are way above the longer term average, and it would take a very abnormal winter to draw down from anything over 3000 to a problem zone.
Still, for the last 5 years Cheap Gas has led to a huge increase in consumption, so when production finally starts slowing....
Whenever that is.
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By metmike
It will turn precarious if we start Winter low and then get some record cold early on.
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By Jim_M - Aug. 16, 2018, 1:28 p.m.
At an absolute best, we are going to struggle to get much over 3000 BCF. With so much electric being generated by gas and we are exporting more than ever, we are not in a good position.
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By WxFollower - Aug. 16, 2018, 5:09 p.m.
1. When considering CDDs in relation to the prior 4 weeks, today's EIA of +33 was clearly bearish though perhaps it was a bearish blip. We'll see in upcoming weeks. Also, vs. the DJ News industry survey mean (+29), it was the first bearish EIA in 2 months (last was for the week ending 6/15) as the prior 7 weeks were either bullish or neutral. In addition, the weather forecasts today looked a bit cooler than they had looked in relation to normals for the rest of the month. That combo made it quite hard to have an up day today. As it was, it closed nearly two cents off the lows. If it were to look warmer in the days to come or at least not any cooler, today's low of 2.891 would have a decent chance to hold considering the tight storage situation.
2. Compared to the last 2 years, I also have the +33 bearish based on the very hot 93 CDD week, the 2nd hottest of this summer to date. However, rather than bearish I have the +33 pretty neutral vs the last 15 years overall when considering the # of CDDs:
- bearish vs 2017, 16, 12, 07, 06
- neutral vs 2015, 13, 10, 09, 05
- bullish vs 2014, 11, 08, 04, 03
3. Now regarding 1998-2002, I have the +33 bullish vs all 5 of those years when considering the 93 CDDs.
(I don't have 1997-1994 CDD data to compare to. So, I can't analyze those 4 years.)
4. The 8/10/18 storage of 2,387 is the lowest for August 10 since way back in 2003! These years had lower storage on August 10 going back to 1994: 2003, 01, 00, 97, 96, and 95. 1999 was about the same.
Anyone have a different take on the current storage situation?
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By metmike - Aug. 17, 2018, 12:21 a.m.
Thanks tremendously for the magnificent insight/stats Larry.
My ng storage records are at home(I'm in Detroit for 2 weeks taking care of my dad) but we can just go to the online EIA historical data to see......or we can rely on your stupendous statistics.
I'm guessing from memory that todays prices below $3 are lower than many years before the age of fracking/horizonal drilling when storage for this date was higher.
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By Jim_M - Aug. 17, 2018, 8:10 a.m.
Lower.....for now. (G)
By Jim_M - Aug. 17, 2018, 4:57 p.m.
It seems the extended forecasts have slowly shifted this week from cool and wet to warm and dry again.
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By metmike - Aug. 17, 2018, 10:30 p.m.
Agree exactly with your take on todays's price movement Larry!
Jim,
I've been saying for the past few days that the cool NWS extended outlooks from early/mid week could bust/be much warmer:
By metmike - Aug. 14, 2018, 3:20 p.m.
(NWS) Extended looks cool in the middle, very warm along the coasts......there is a good chance with so much uncertainty in week 2 and some solutions the complete opposite of this, that the forecasts below will bust.
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By metmike - Aug. 15, 2018, 3:45 p.m.
Extended from NWS still shows cool and wet/average for the Midwest. Warm along the Coasts.
Could turn out much different with regards to temperatures as we get deeper into week 2(potential to be much warmer in the midsection)
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By metmike - Aug. 16, 2018, 3:43 p.m.
NWS extended maps turning in the directions as speculated yesterday:
"Could turn out much different with regards to temperatures as we get deeper into week 2(potential to be much warmer in the midsection)"
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By MarkB - Aug. 19, 2018, 1:05 a.m.
So. Fundamentally, we should be bullish. Trade the charts.
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Newer Comments:
+++++++++++++++++++++ By tjc - Aug. 20, 2018, 11:27 a.m.
Good morning, Forum
NGas appears to have topped.
Numerous %R sells, elevated RSI, cycle timing of a top was last week.
I bought Sept 2.90 puts this morning.
Expecting significant selloff.
2 cents!
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By Jim_M - Aug. 20, 2018, 1:30 p.m.
You might be right. But I'm holding long because this isn't a normal year. To get to the EIA's projection is going to require some extremely strong injections of 80 bcf a week over the next 12 weeks. I just don't see it happening. The only way I see it happening is if the gas companies have had a hand on the valve, metering out flow and now they are going to open it up.
When was the last time NG averaged 80 bcf over 12 weeks?
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By WxFollower - Aug. 20, 2018, 4:13 p.m.
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Jim,
- The last time was 2015, which averaged 80/week for those 12 weeks. However, the upcoming 3 weeks in 2015 (mid to late Aug.) averaged ~22/week higher than what I'm projecting for 2018.
- 2014 averaged 92/week. However, the upcomingt 3 weeks in 2015 averaged ~33/week higher than what I'm projecting for 2018. Also, the balance was much looser then vs now. So, 92/week isn't happening.
- 2013 averaged 67/week. This is probably a more reasonable guess for 2018 at this stage as balance is similar now.
- 2012 averaged only 56/week but the balance was tighter. So, I don't see it being this low.
- 2011 averaged 83/week, but the upcoming 3 weeks in 2011 averaged ~15/week higher than what I'm projecting for 2018.
- 2010 averaged 69/week. This is probably a more reasonable guess for 2018 at this stage as balance is similar now.
- 2016 (59/week) and 2017 (57/week) had tighter balances. So they're too low to be good analogs.
In conclusion, an average of 65-70/week for the next 12 weeks is my current best guess, which would get storage to near 3,200 bcf. Lingering heat into early Sep as well as early chill in October could lower this.
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By Jim_M - Aug. 21, 2018, 10:55 a.m.
Good stuff! Thanks for the information. I didn't really expect it, but it is enlightening. Who knows, maybe the EIA knows something we don't for them to have such a strong projection for the next 3 months.
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By WxFollower - Aug. 21, 2018, 4:34 p.m.
NG was up early on warmer early morning 2 week model/forecast consensus, especially mid to late week 2 (8/31-9/4). The near record warm last week of August remains, which still means only a relatively small injection then. Now with the warmth increasing for early Sep., the chances of a large injection in the subsequent report are dropping though it almost surely would be a good bit larger than the prior one due to Labor Day related demand slowdowns, alone.
Most of the day saw it going back and forth with no clear direction though it was always solidly in the positive for the day. Later, it rose to new highs after 12Z model consensus reaffirmed the strong warmth acoming.