prices slide as the storage deficits contract and winter comes to a close

Highlights of the Natural Gas Summary and Outlook for the week ending March 22, 2019 follow. The full report is available at the link below.

  • Price Action: The April contract fell 4.2 cents (1.5%) to $2.753 on a 17.6 cent range ($2.897/$2.721).
  • Price Outlook: The market posted both a new high and low after bullish weather forecasts early in the week helped lift prices only to see moderating weather forecasts and a relatively small storage withdrawal and a bearish revision to the previous week’s storage report pressured prices lower. Of the 1,003 weeks since 2000, 115 have witnessed both a new high and new weekly low while only 96 have witnessed inside weeks, where neither a new high nor low was paosted. For daily updated storage projections, subscribe to our joint publication with RBN Energy. CFTC data indicated a 545 contract increase in the managed money net long position as longs added and shorts added. This is the highest net long position since February 5. Total open interest rose 37,054 to 3.202 million as of March 19. Aggregated CME futures open interest fell to 1.151 million as of March 22. The current weather forecast is now cooler than 5 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 2.5 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting 0.698 bcf. Cameron is exporting 0.000 bcf.
  • Weekly Storage: US working gas storage for the week ending March 15 indicated a withdrawal of (47) bcf. Working gas inventories fell to 1,143 bcf. Current inventories fall (303)bcf (-21.0%) below last year and fall (544) bcf (-32.3%) below the 5-year average. The EIA noted a revision for the withdrawal for the week ending March 8 that resulted in change from the originally reported (204) bcf to a withdrawal of (200) bcf. This was still a record weekly withdrawal.
  • Storage Outlook: The EIA weekly implied flow was 0 bcf from our EIA storage estimate. This week’s storage estimate was again outside our tolerance. The forecasts use a 10-year rolling temperature profile past the 15-day forecast. Our joint publication with RBN updates storage projections daily.
  • Supply Trends: Total supply fell (1.2)bcf/d to 83.0 bcf/d. US production fell. Canadian imports fell. LNG imports fell. LNG exports fell. Mexican exports fell. The US Baker Hughes rig count fell (10). Oil activity decreased (9). Natural gas activity decreased (1). The total US rig count now stands at 1,016. The Canadian rig count fell (56) to 105. Thus, the total North American rig count fell (66) to 1,121 and now trails last year by (35). The higher efficiency US horizontal rig count fell (7) to 900 and rises +30 above last year.
  • Demand Trends: Total demand fell (24.5) bcf/d to +88.9 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand fell. Electricity demand fell (10,661) gigawatt-hrs to 70,792 which trails last year by (1,856) (-2.6%) and trails the 5-year average by (780)(-1.1%%).
  • Nuclear Generation: Nuclear generation fell (3,303)MW in the reference week to 83,879 MW. This is (3,412) MW lower than last year and (1,525) MW lower than the 5-year average. Recent output was at 83,432 MW.

The heating season has begun. With a forecast through April 5 the 2018/19 total cooling index is at (2,875) compared to (2,711) for 2017/18, (2,241) for 2016/17, (2,419) for 2015/16, (2,814) for 2014/15, (3,111) for 2013/14, (2,896) for 2012/13 and (2,467) for 2011/12.

Attachments: