Natural Gas Market Update – 9/9/2016

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Storage Report – 9/8/2016

Thursday’s storage report cited an injection of 36 Bcf, less than expectations of a 40 Bcf build.

As a comparison, last year’s injection for the same week was 78 Bcf, and the 5-year average is also a 64 Bcf injection.

Working gas in storage was 3,437 Bcf as of Friday, September 2nd, 2016, according to EIA estimates. Inventory was reported at 196 Bcf (+6.0%) more than last year at this time, and 306 Bcf (+9.8%) above the 5-year average of 3,131 Bcf.

Natural Gas Trends:

September NYMEX: September 2016 moved off the board Monday, August 29th, settling the month at $2.853/Dth. As a comparison, September 2015 NYMEX closed at $2.638/Dth, and the 3-year average settle price for September is $3.149/Dth.

October NYMEX: Closed trading Thursday at $2.806/Dth, up 13 cents from Wednesday’s close of $2.676/Dth. Over the last month, OCT-16 has traded as high as $2.949/Dth and as low as $2.584/Dth.

Seasonal Strips: This year’s winter strip (NOV16-MAR17) settled last Thursday at $3.165/Dth up 2.1 cents from last week. Next year’s summer strip (APR17-OCT17) settled Thursday’s trading at $3.007/Dth, flat from a week prior.

12 Month Strip: Settled Thursday at $3.053/Dth, down 1 cent from the month prior. As a comparison, the strip was trading one year ago at $3.011/Dth.

Summary:

According to weather models, this summer has concluded as the hottest on record. The summer heat is expected to linger on into the middle of September. Cooler temperatures are forecasted for the Plains and Midwest Regions toward the end of the month.

August saw natural gas production ramp back up to levels as high as 73 Bcf/d. Tropical storms over the past week have interrupted production in the gulf, and output has fallen slightly since, and is now averaging closer to 72.6 Bcf/d. The storage report this week, once again for the 18th consecutive time, has cited an injection that was less than both a year ago and the 5 year average. Shockingly enough, storage is still on pace to reach north of 4.0 Tcf, which would be close to a new all-time record.

Natural gas prices have pulled back slightly since hitting highs ahead of the Labor Day weekend. We have passed the peak of the cooling season, and moderating temperatures could put some added downward pressure on prices. However, the EIA expects natural gas prices to continue to trend up the rest of the year and into next, with prices nearing $4.00/Dth by the end of 2017.

 

Natural Gas Market Update – 9/9/2016