Natural Gas Market Update – 1/4/2018

Storage Report – 01/04/2018

Thursday’s storage report cited a withdrawal of 206 Bcf, with estimates calling for a withdrawal of 220 Bcf.  Last year for the same week there was a withdrawal of 76 Bcf and the 5-year average withdrawal is 99 Bcf.

Working gas in storage was 3,126 Bcf as of Friday, December 29th, 2017, per EIA estimates.  Inventory was reported at 192 Bcf (-5.8%) less than last year for the same week and 192 Bcf (-5.8%) less than the 5-year average of 3,318 Bcf.

Natural Gas Trends:

February NYMEX:  Settled Thursday down 12.8 cents at $2.880/Dth.  As of this writing the market is trading at $2.784/Dth.

Strips:  With the Bomb cyclone trampling the northeast, warmer weather is just a few months away as the summer strip (APR18-OCT18) settled Thursday at $2.740/Dth, down 6.4 cents from the week prior.

12 Month Strip:  Settled Thursday at $2.809/Dth, down 2.1 cents from the week prior.

Summary:

This week’s EIA storage report came in with a withdrawal of 206 Bcf while estimates had centered around 220 Bcf.  New Year’s Day was a record setter with the U.S. burning 143 Bcf for the day compared to the prior daily record of 142 Bcf consumed during the Polar Vortex of 2014.

We expect there are going to be a few more reports of triple digit withdrawals in the coming weeks which will deplete inventory quickly as the report reflects the prior week’s activity.

The market has all but shrugged off the numbers as we look forward.  The increased demand is already being seen in the spot cash market as suppliers must fill additional gas quantities required.

Weather patterns are changing with more than 75% of the country showing normal to above normal temperatures in the 6-10 day outlook according to NOAA and a continuation of that pattern for the 8-14 day forecast, which should return demand to seasonable numbers.

Production has been hit with well head freeze offs, but is expected to rebound very quickly as the market is looking at last year’s ramp up and record daily production numbers and anticipates that the market will be well supplied through 2018.

Natural Gas Market Update – 1/4/2018