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:
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!
Thursday's EIA Number: +69 billion cubic feet-neutral I thought the number would be smaller, so there must be alot of supply out there!
|Working gas in underground storage, Lower 48 states Summary textCSVJSN|
billion cubic feet (Bcf)
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Here are the temperatures from the 7 day period, ending last Friday that was used for this EIA storage report. Near record heat in some high population centers of the East(and Eastern Midwest). So the injection was a bit less than the 5 year average.
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.
|Natural gas 3 months|
Naturalgas 1 year below
Naturalgas 5 years below
By Jim_M - Sept. 13, 2018, 2:27 p.m.
Based on last weeks injection, I think that puts us needing close to 94 BCF a week to reach the EIA number.
I'm going to go with 3100 bcf for ending storage.
By metmike - Sept. 13, 2018, 5:25 p.m.
We're almost 600 bcf behind the 5 year average and more than 600 bcf behind last year and we're headed into the heating season in 2 months.
However, that has not seemed to matter for many months. When we were gobbling up ng from heat this Summer(for use to generate AC cooling) we could never crack $3. Even despite having the lowest storage in a long time. It's not you or me that decides the value of natural gas.........the market does.
If the market knows of huge production coming............and there is no doubt that there are some people that know more than we do about where ng production is going to be 2-3-4 months from now.
End users, producers, large specs, commercials.....big players, they can trade on longer term fundamentals. Extreme weather from cold and hot is short term.
Yeah, it WILL always force ALL traders to react when the forecast is for extreme cold or heat but that can never last.
Sometimes, even when the forecast is looking the most bullish is when the LONG term fundamentals kick in. The price has rallied as much as it can from buying generated from short term weather. The short term weather buying becomes exhausted from traders buying on bullish short term weather.
However, if you have some huge traders, let's say producers wanting to hedge or see $3 as very profitable or large specs that treat trading as a longer term venture and they see the same thing..........or a market that knows these entities are going to be there selling at $3 and is not interested in trying to challenge their overwhelming capital at those levels................then you have a market that can ignore some very bullish short term storage numbers.
By metmike - Sept. 13, 2018, 5:39 p.m.
From Natural Gas Intelligence:
Natural Gas Futures Up, Then Down as Florence Lashes Coast
metmike: This is just one of those times when its impossible for me to pinpoint why the weather caused natural gas to go up earlier this week, other than heat in the south increasing CDD's and chilly in the north increasing HDD's speculated yesterday........it's not always weather.
The cold didn't look as threatening to me today but this is the time of year when weather is not as powerful because warmth north is becoming more bearish every day and cold more bullish, while warm south is still bullish and cool is still bearish..........the opposite of the north.
Bottom line is that CDD's and HDD's combined right now and for the next several weeks are not close to mid Summer and not anywhere close to mid Winter. The market can trade the disparity vs average but the difference is not nearly as powerful right now as those other times.
A theory for why prices acted the way they did this week that makes most sense now, is that last weeks record heat caused alot of ng usage and expectiations of an EIA storage number today that would be bullish vs the 5 year average. The market was strong this week ahead of the release of that number, which to me, in retrospect seemed bearish.........even though I read that it was neutral.
I was guessing the number would be less than what it was based on the heat from last week. Larry can tell us how it came in vs previous years.