Thursday, August 4, 2016

EIA Natural Gas Inventory Draw Shrinks Oversupply by 60 BCF

Today's 6 BCF DECLINE in natural gas inventories marks a significant drop in the storage surplus, which fell by 60 BCF to just 464 BCF, with more than three months remaining in the injection season. Today's surprise should drop storage injection estimates for the remainder of August, and end-of-season estimates should be revised downward, falling below 4 TCF for some analysts.
EIA Data as of 7/29/2016:

Thursday, July 28, 2016

EIA Natural Gas Inventories Rose Much Less Than Expected, Prices Spike 23 Cents

EIA Natural Gas Inventories added just 17 BCF last week, against an expectation closer to 30, spiking prices by 22 cents, the largest spike all summer.
EIA Data as of 7/22/2016:

Friday, July 22, 2016

Rigs Counts: Permian Leads a +14 Increase in Oil Rigs, Gas Rigs Down -1

Oil rigs rose by a significant +14 this week, with 8 of those drilling in the Permian.
Gas rigs were basically flat again, though the Barnett rig count rose from 5 to 8, which is unlikely to have the impact that 3 rigs would in PA.

The rising oil rig count is a trend that's been underway since May, but a rising natural gas forward strip has provoked no such response from drillers, and the gas rig count has been flat since March.

Baker Hughes rig counts through 7/22/16:

Thursday, July 21, 2016

Natural Gas Storage Surplus

The excess gas in storage has been steadily eliminated since May 1, when it stood at +836.  It should be below +500 by the end of July, which isn't quite on pace to reach zero by the end of the injection season in mid-November.  It isn't necessary to fully eliminate it, if the additional volumes geographically match the remaining storage capacity of 200-400 BCF, but that is typically difficult, and large moves in regional price basis differentials can be expected in Oct-Nov.

The outlook for surplus elimination is generally improving, by means of several variables:

  1. Mexico is expected to steadily increase gas imports from the US as their infrastructure projects are completed.
  2. US production is now notably lower than '15, after accounting for maintenance on REX and other temporary factors.  
  3. LNG exports will rise by 0.6 BCF when the next Cheniere train comes online, which could begin as soon as September.
  4. Some combination of hot weather and coal switching has natural gas demand for power generation at very high levels this summer.
  5. Rig counts don't portend a quick rebound in production, despite a (relatively) strong strip beginning this winter.
The negative factors are fewer/smaller:

  1. Canadian gas storage is at record highs, forcing production shut-in and large increases in exports to the US, which should persist until cold weather arrives in Canada in October.
  2. Northeast US gas production remains stubbornly high despite rig counts that are a fraction of their peak.
  3. Oil rigs are returning to the patch, bringing the prospect of additional associated gas volumes.
  4. Autumn shoulder season should hold less prospect of coal switching, with higher prices in place.

EIA Reports a lower than expected +34 BCF Natural Gas Storage Injection, Surplus Falls by 27 BCF to 559 BCF.

Today's tight +34 EIA Natural Gas Storage Report brought the excess gas volume in storage down by 27 BCF, to 559. The gas market has been steadily reducing the surplus, after falling behind in April, but it will take the remainder of the season, if the market can in fact bring inventories to carry-out at 4 TCF in November.
EIA Data as of 7/15/2016: