Domestic Production

Natural Gas Market Update – 2/15/2018

 

Storage Report – 02/15/2018

Thursday’s storage report cited a withdrawal of 194 Bcf, while estimates centered around a 188 Bcf pull. Last year for the same week there was a withdrawal of 120 Bcf and the 5-year average withdrawal is 154 Bcf.

Working gas in storage was 1,884 Bcf as of Friday, February 9th, 2018, per EIA estimates. Inventory was reported at 577 Bcf (-23.4%) less than last year for the same week and 433 Bcf (-18.7%) less than the 5-year average of 2,317 Bcf.

 

 

Natural Gas Trends:

March NYMEX: Settled Thursday down less than a penny at $2.58/Dth.

Seasonal Strips:  The upcoming summer strip (APR18-OCT18) settled Thursday at $2.701/Dth, down 5.0 cents from the week prior. Next year’s winter strip (NOV18-MAR19) settled Thursday at $2.917/Dth down 5.8 cents from last week.

12 Month Strip: Settled Thursday at $2.765/Dth, down 5.9 cents from the week prior.

Summary: This week’s EIA storage report withdrawal of 194 Bcf came in above the projected draw of 188 Bcf and the market displayed little reaction to the news, remaining virtually flat.
Although demand for natural gas has been up over the last few weeks, the market is staring at increased production numbers and a warming trend which should keep prices from increasing. NOAA forecasts for the end of February show a return to normal-to-above-normal temperatures for the eastern 2/3rds of the country immediate to the end of March trading, which is also the end of winter trading.

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 Producers’ Bankruptcies and its Impact on Gas Production

Newsletter Story header-NGProducerBankruptcies-07.11

As of May 16th – 77 natural gas and oil producers in North America have filed for bankruptcy since 2015, and 35 of those have done so since the start of 2016…

A recent study conducted by PointLogic Energy explored how much production is represented by these 77 companies, where they are located and the overall impact it is having.

The analysis concluded that 4.4 billion cubic feet per day of gas production and 307,000 barrels per day is represented by the bankruptcy companies.  The production of these companies represents 5.4% and 3.6% of the lower-48 states’ gas and oil production respectively.

 

Some major takeaways from the review:

  • The volume of gas attributed to the companies in bankruptcy is much larger than the corresponding volumes of oil.
    • For Example: In Texas 7.5% of natural gas production is bankrupt while only 2.8% of oil production is represented.
  • There are regional winners and losers: Of the major producing states, Texas, Wyoming, Oklahoma and Louisiana bear the brunt of bankruptcy related volumes. The Northeast and Gulf of Mexico appears largely unscathed.

The overall takeaway when reviewing the companies that have filed for bankruptcy is that they are highly weighted to natural gas, rather than oil products.

So what does it mean going forward? If oil prices recover and producers increase drilling we will likely see an increase in associated gas production, regardless of what natural gas prices are doing. Rising gas production from the associated oil production will inflict even more troubles for the bankrupt market segment with storage constraint worries. The remaining summer looks to be a difficult price environment for natural gas producers, especially in the Texas, Oklahoma, Wyoming and Louisiana regions.