We highlighted a sentence that lends credence to the idea the market will see $3,50 this season.
From the Energy Information Administration:
Natural Gas Weekly Update
for week ending April 15, 2020 | Release date: April 16 2020
In the News:
Natural gas stocks post smallest heating season net withdrawals since 2015
Working natural gas in storage in the Lower 48 states as of March 31, 2020—the traditional end of the heating season that began November 1, 2019— totaled 2,008 billion cubic feet (Bcf), 19% higher than the five-year (2015-19) average for the end of the heating season, according to EIA’s Weekly Natural Gas Storage Report released on April 9. Continued strength in natural gas production, along with reduced heating demand for natural gas as a result of relatively mild winter temperatures throughout most of the Lower 48 states, account for relatively higher inventory levels. This heating season ended at the highest level for working natural gas stocks since 2017 when working natural gas stocks totaled 2,035 Bcf.
Working natural gas stocks totaled 3,575 Bcf entering the winter heating season in November 2019—their highest levels since 2017—after surpassing the five-year average for the first time in two years in October 2019. Total net withdrawals from storage during the 2017–18 heating season were 1,718 Bcf, 14% below the five-year average for the season. The 2019–20 U.S. heating season was characterized by periods of significantly warmer-than-normal temperatures. Cumulative heating degree days (HDDs) were 10% less than normal during the entirety of the 2019-20 heating season, only averaging above normal for the first week of the heating season.
During the 2019-20 heating season, natural gas production posted significant year-over-year increases that more than offset growth in natural gas consumption. Increased liquefied natural gas exports and increased power burn (demand for natural gas electric generators) exceeded the declines in natural gas consumption for residential and commercial customers, which resulted from the relatively mild winter temperatures. This increase in natural gas production resulted in falling natural gas prices, and the surplus in working gas inventory climbed to 316 Bcf by the end of the heating season.
EIA does not expect the working gas inventory surplus to continue to grow during the 2020 refill season (April 1- October 31). EIA’s Short-Term Energy Outlook (STEO) forecasts that natural gas production will decline from year-ago record levels during the summer. These production declines, combined with continued strength in exports, will lead to smaller net injections into working gas. EIA expects that working gas stocks will total 3,904 Bcf, 185 Bcf above the five-year average and 252 Bcf above last year’s level, by the end of the 2020 refill season. The April 2020 STEO forecasts are subject to heightened uncertainty because of the economic slowdown and significant changes in energy markets recently.....MUCH MORE
Overview:
(For the week ending Wednesday, April 15, 2020)
- Natural gas spot prices fell at most locations this report week (Wednesday, April 8 to Wednesday, April 15). The Henry Hub spot price fell from $1.80 per million British thermal units (MMBtu) last Wednesday to $1.64/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the May 2020 contract decreased 19¢, from $1.783/MMBtu last Wednesday to $1.598/MMBtu yesterday. The price of the 12-month strip averaging May 2020 through April 2021 futures contracts declined 5¢/MMBtu to $2.299/MMBtu.
- The net injection to working gas totaled 73 billion cubic feet (Bcf) for the week ending April 10. Working natural gas stocks total 2,097 Bcf, which is 72% more than the year-ago level and 21% more than the five-year (2015–19) average for this week.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 31¢/MMBtu, averaging $2.82/MMBtu for the week ending April 15. The price of natural gasoline fell by 2%. The prices of propane, ethane, butane, and isobutane rose by 9%, 11%, 18%, and 18%, respectively. The increase in NGPL values was a result of the rise in crude oil prices during the report week and international NGPL demand remaining robust, allowing prices to correct after significant price declines in past weeks.
- According to Baker Hughes, for the week ending Tuesday, April 7, the natural gas rig count decreased by 4 to 96, the lowest level since October 2016. The number of oil-directed rigs remained constant at 562. The total rig count decreased by 4, and it now stands at 660.
Prices/Supply/Demand:
Prices fall despite widespread cooler-than-normal temperatures. This report week (Wednesday, April 8 to Wednesday, April 15), the Henry Hub spot price fell 16¢ from $1.80/MMBtu last Wednesday to a low of $1.64/MMBtu yesterday. Temperatures were generally cooler than normal, especially across the Great Plains. At the Chicago Citygate, the price decreased 12¢ from $1.75/MMBtu last Wednesday to a low of $1.63/MMBtu yesterday....
