From Reuters, analyst/columnist John Kemp, December 20:
Not even a relatively cold start to the winter heating season and a record volume of gas-fired power generation has been enough to prevent U.S. natural gas prices getting hammered since the start of November.
Traditionally severe seasonal swings in inventories and prices are being softened by surging domestic production and the increasing international integration of the U.S. gas market through LNG exports.
That means traders have no reason to expect gas stocks to remain anything but plentiful through the winter heating season, so there is little need to price-ration them in the meantime.
Futures prices for gas delivered to the Henry Hub in March 2020 have slumped to just above $2.20 per million British thermal units, down from $2.70 early last month and $2.90 a year ago.
Working stocks in underground storage amounted 3,411 billion cubic feet (bcf) on Dec. 6, up by 618 bcf (22%) compared with the same period last year (“Weekly natural gas storage report”, EIA, Dec 19).
That is a more than adequate supply despite colder-than-average temperatures across many of the major population centres in the United States during the first half of November.
The subsequent spell of warmer-than-normal temperatures kicked away the last support for prices and sent the March 2020 contract plunging to its lowest level since it began trading in 2008.
INVENTORY SWINGS........MUCH MORE
