For the weather that affects residential heating demand and natural gas prices, go here:
From Natural Gas Intelligence:
Lean Inventories, More Overnight Cold Trends Point December Natural Gas Higher
8:59 AM
December natural gas futures continued to race higher early Tuesday, adding 25.2 cents to $4.040/MMBtu shortly before 9 a.m. ET, with colder forecast trends overnight prompting further gains as the market frets over lean storage inventories.
Storage is Very Low for this time of year!!
Storage is below the bottom of the previous 5 year range and still 580 bcf below last year at this time!
This is why the temperature forecast matters....in the Summer/cooling season and now in the early part of the key Winter/heating season............which continues to look colder early this week.
EIA storage report on Thursday +65 bcf...........very bearish. Storage is low but supplies are gushing in. If/when it warms up, we will start eroding the big deficit but right now, we are increasing the deficit because of very cold weather.
| Working gas in underground storage, Lower 48 states Summary text CSV JSN | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical Comparisons | |||||||||||||||||||||||||
| Stocks billion cubic feet (Bcf) | Year ago (11/02/17) | 5-year average (2013-17) | |||||||||||||||||||||||
| Region | 11/02/18 | 10/26/18 | net change | implied flow | Bcf | % change | Bcf | % change | |||||||||||||||||
| East | 831 | 826 | 5 | 5 | 925 | -10.2 | 919 | -9.6 | |||||||||||||||||
| Midwest | 980 | 956 | 24 | 24 | 1,111 | -11.8 | 1,093 | -10.3 | |||||||||||||||||
| Mountain | 182 | 180 | 2 | 2 | 224 | -18.8 | 219 | -16.9 | |||||||||||||||||
| Pacific | 265 | 262 | 3 | 3 | 317 | -16.4 | 351 | -24.5 | |||||||||||||||||
| South Central | 949 | 919 | 30 | 30 | 1,210 | -21.6 | 1,246 | -23.8 | |||||||||||||||||
| Salt | 253 | 234 | 19 | 19 | 334 | -24.3 | 346 | -26.9 | |||||||||||||||||
| Nonsalt | 696 | 686 | 10 | 10 | 876 | -20.5 | 900 | -22.7 | |||||||||||||||||
| Total | 3,208 | 3,143 | 65 | 65 | 3,788 | -15.3 | 3,829 | -16.2 | |||||||||||||||||
Here's the temperature map for the 7 days going into that EIA report.
It was warmer than the previous week, so the injection WAS larger as we were expecting here.....+65bcf vs +48 bcf on the previous report.
Here are temperatures for the 7 day period coming up for this Thursdays EIA report. Much colder then the previous 7 day period for last weeks report.
Any guesses on the much smaller injection?
With this weeks cold, the report next week WILL be the seasons first withdrawal from storage.
Repeating the frigid Winter of 5 years ago, gets storage to precariously low levels and the price spikes to the highest in over a decade.
Repeating the mild Winters of 2 and 3 years ago and storage catches all the way up with last year and prices get buried into the 2's.
Right now EIA projects winter heating demand at about 6.6 TCF, and end of season inventories at 1.37 TCF on March 31st. Heating demand over the last 28 winters ranged from 5.7 TCF to 7.3 TCF, averaging 6.4. Here's the history from EIA:
For previous discussions on natural gas, go here:
https://www.marketforum.com/forum/topic/16922/
https://www.marketforum.com/forum/topic/16779/
https://www.marketforum.com/forum/topic/16538/
https://www.marketforum.com/forum/topic/16435/
https://www.marketforum.com/forum/topic/15990/
https://www.marketforum.com/forum/topic/16337/
gedigan,
Apoligies for overlooking your comment last Thursday. Thanks for contributing and welcome agoard!
Outstanding article that WxFollower posted here yesterday:
On the chart below. Note the storage deficit, in blue growing to a massive 900bcf vs the previous year. In the past, this would have triggered higher prices in order to increase supplies. I contend that supplies were already scheduled to increase a great deal and the market felt no need to rally to accomplish this.
The writer of this article contends that ng prices staying low, caused a lot of electric demand for coal, to switch to natural gas which increased demand for natural gas and kept storage from building up as fast as they thought it would.
A huge factor has been weather. A very cold Spring increased demand(cold end of Winter vs the previous year) and a very warm Summer increased heating, then cooling demand.
We are in the midst of extreme heating demand for early November, before storage has been filled to safe levels for the Winter. A continuation of this weather for much of the upcoming Winter would put supplies at precariously low levels early next year...........so now the market is very nervous.
Alot of massive short positions, predicated on supplies rebuilding, are capitulating here as they cry "uncle". Volume recently has been thru the roof.
It looked like yesterday might have set a record for volume and have even more volume today. Should the models turn milder, this will end up being a textbook/classic blow off top with the buying exhaustion right now.
However, the extended weather pattern on, particularly the Canadian model, looks frighteningly cold(thus scaring the long lived huge shorts out).
So I wouldn't want to be short if it verifies.
Tuesday closing comments from Natural Gas Intelligence:
Early Winter Cold Lights Fire Under Natural Gas Markets as Henry Hub Tops $4/MMBtu
5:37 PM
With impressive early winter cold amplifying the risks posed by lean stockpiles, the recent rally in the natural gas futures market showed no signs of letting up Tuesday -- and if anything seemed to accelerate. Meanwhile, another day of widespread weather-driven gains yielded some of the strongest early winter spot prices since 2014; the NGI Spot Gas National Avg. tacked on another 35.5 cents to $4.410/MMBtu
Hope you NG experts are (or just closed out) long positions.
Great, great analysts for the past several weeks.
Approaching over done??
Thanks tjc,
Yes, definitely over done and all the signs of a classical blow off top............but if forecasts get even colder, we can still go higher.
The top will be in when the forecasts add a bunch of cold and we can't go higher that day..............or, when the forecasts turn much warmer.
Things always look the most bullish at the top but you don't know then if they will get even more bullish the next day and the day after that.............until after it stops getting more bullish and by then, in a blow off top scenario, the prices has already plunged from the spike high.
On many to most days(and nights), since we gapped higher on November 5th a feature of the updated forecasts has been to get colder. To me, the -AO and -NAO the last few days, now VERY negative in 2 weeks and Canadian ensembles have advertised EXTREME cold that actually justifies much of this spike higher.
Natural Gas Intelligence closing comments for Wednesday:
Natural Gas Futures Booming as Wintry Weather Lifts Spot Market
Spurred on by historically low storage levels, a strong start to winter and forecasts that seem to continue ratcheting up...
Perhaps the recent mention of the idea that we may be entering into another Maunder minimum, that could possibly have an affect on our climate (another "little ice age"), is also not being taken into account on current NG prices.
