The EIA projected over 3300 bcf in storage by Dec 1st. With 9 more weeks to go, that 80 bcf per week needed has turned into 88+ bcf a week.
The end of the tunnel looks like it is moving away from us even as we get closer. Kind of like the visual affects in an Alfred Hitchcock movie.
I guess 2-3 weeks of 120 bcf injections will get us back in the ball park.
We may get about 2 big weeks, but it seems like we're dropping straight from cooling season to heating season - 90 to 60 in 2 days.
Thanks Jim and Patrick!
I think that the market will have a hard time going much lower until storage is refilled much more. However, the market has long ago discounted the idea that we are going to be anywhere near the 5 year average by the start of the drawdown season.
If injections come in strong because production has increased, the market can simply extrapolate those out based on that production continuing to be strong...........with smaller drawdowns in Dec/Jan because of it.
So the time frame to catch up with the 5 year average is a few months later. At the start of the year, it was going to be November. Now, maybe it's January............depending on the weather.
The thing that seems most likely is that early heating season cold waves of high intensity will have the potential to be very powerful market movers because of low storage.
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...........and soon, to generate residential heating:
https://www.marketforum.com/forum/topic/12603/
From Natural Gas Intelligence from earlier:
October Natural Gas Steady as Weekend Weather Data Seen Mostly Unchanged
Storage is Very Low for this time of year!! This is why the temperature forecast matters....in the Summer/cooling season and Winter/heating season.
Storage is just below the bottom of the previous 5 year range and also almost 700 bcf below last year at this time!
From Thursday: EIA number +63 bcf Neutral?
Comments from Natural Gas Intelligence after the number was reported:
EIA Storage Matches Consensus as Natural Gas Futures Response Mixed
The Energy Information Administration (EIA) reported a 63 Bcf build into Lower 48 gas stocks for the week ended Aug. 31, a number that fell in line with estimates
| Working gas in underground storage, Lower 48 states Summary textCSVJSN | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical Comparisons | |||||||||||||||||||||||||
| Stocks billion cubic feet (Bcf) | Year ago (08/31/17) | 5-year average (2013-17) | |||||||||||||||||||||||
| Region | 08/31/18 | 08/24/18 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
| East | 662 | 640 | 22 | 22 | 776 | -14.7 | 759 | -12.8 | |||||||||||||||||
| Midwest | 699 | 667 | 32 | 32 | 867 | -19.4 | 847 | -17.5 | |||||||||||||||||
| Mountain | 162 | 157 | 5 | 5 | 205 | -21.0 | 192 | -15.6 | |||||||||||||||||
| Pacific | 246 | 241 | 5 | 5 | 297 | -17.2 | 324 | -24.1 | |||||||||||||||||
| South Central | 799 | 800 | -1 | -1 | 1,065 | -25.0 | 1,036 | -22.9 | |||||||||||||||||
| Salt | 178 | 183 | -5 | -5 | 265 | -32.8 | 262 | -32.1 | |||||||||||||||||
| Nonsalt | 621 | 617 | 4 | 4 | 800 | -22.4 | 774 | -19.8 | |||||||||||||||||
| Total | 2,568 | 2,505 | 63 | 63 | 3,211 | -20.0 | 3,158 | -18.7 | |||||||||||||||||
This report, for the week ending August 31, 2018, will be the last report EIA publishes using the current sample. As previously announced, on Monday, September 10, 2018, at 3:00 p.m., EIA will revise estimates for the eight weeks covering July 13, 2018, through August 31, 2018, to gradually phase in the estimates from the new sample. For additional information, please see the notice of changes to the WNGSR: http://ir.eia.gov | |||||||||||||||||||||||||
Below is the temperature average for the 7 day period used for the EIA storage report that came out last Thursday at 9:30am. It was warmer than the previous 7 day period. Since more ng was used to generate more AC cooling during this period, the injection was a bit lower than the previous week(+70 bcf)
Here are the temperatures from the 7 day period, ending last Friday that will be used for this upcoming Thursday's EIA storage report. Near record heat in some high population centers of the East(and Eastern Midwest). So its likely that the injection will be a bit less than the 5 year average, maybe less than the previous 2 weeks?
Natural gas hit some tough resistance back in August. Even the hottest of the hot forecasts couldn't push us to $3 with very low storage.
Temperatures as we go out to late September are getting to the time of year that is not as important for cooling. The heating season will be coming up. But we are hitting a zone of strong support with that low storage also in place.
| Natural gas 3 months |
Naturalgas 1 year below
Naturalgas 5 years below
| Naturalgas10years below
|
Closing comments from Natural Gas Intelligence:
Explosion Rattles October Natural Gas Contract; Spot Gas Mostly Lower
5:33 PM
October natural gas prices rose slightly Monday, despite cool weather to start the week and near-record production. The Nymex October gas futures contract settled 2.8 cents higher at $2.804 as strong cash prices in key markets and a pipeline explosion rattled a market that otherwise faced multiple headwinds. Spot gas prices, meanwhile, were mixed even with overall mild weather across the country. All eyes are on Hurricane Florence, which had reached Category 4 status by early afternoon Monday. The NGI National Spot Gas Avg. was up a nickel to $2.62.