Highlights of the Natural Gas Summary and Outlook for the week ending September 27, 2019 follow. The full report is available at the link below.
- Price Action: The spot price fell 13.0 cents (5.1%) to $2.404 on a 21.0 cent range ($2.590/$2.380).
- Price Outlook: Prices ended the week lower despite still bullish weather forecasts as well above normal cooling demand, especially in Southern locations, continued. However, the EIA again reported a much higher than expected storage injection and above normal temperatures are now bearish in most locations. Prices easily established a new weekly low with the string of 4 consecutive higher weeks over. The implications of the last two weekly storage reports is quite bearish and a continuation of above normal temperatures will likely lead prices still lower. For daily updated storage projections, subscribe to our joint publication with RBN Energy. CFTC data indicated a (3,600) contract increase in the net short managed money position as longs liquidated and shorts covered. The latest position represents a (159,388) contract reduction from the record (219,742) net short position from August 13. Total open interest fell (75,976) to 3.450 million as of September 24. Aggregated CME futures open interest fell (12,849) to 1.146 million as of September 27. The 1.122 million open interest on September 25 was the lowest since October 26, 2016. The current weather forecast is now warmer than 6 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.8 bcf. Cove Point is net importing 0.0 bcf. Corpus Christi is exporting 1.588 bcf. Cameron is exporting 0.525 bcf. Freeport is exporting 0.746 bcf. Elba Island is exporting 0.030 bcf.
- Weekly Storage: US working gas storage for the week ending September 20 indicated an injection of +102 bcf. Working gas inventories rose to 3,205 bcf. Current inventories rise 437 bcf (15.8%) above last year and fall (48) bcf (-1.5%) below the 5-year average.
- Storage Outlook: The EIA weekly implied flow was 10 bcf from our EIA storage estimate. This week’s storage estimate was well outside our tolerance. Over the last five weeks, the EIA has reported total injections of +408 bcf compared to our +383 bcf estimate. 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 (0.3)bcf/d to 84.5 bcf/d. US production rose. Canadian imports rose. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (8). Oil activity decreased (6). Natural gas activity decreased (2). The total US rig count now stands at 860 .The Canadian rig count rose +8 to 127. Thus, the total North American rig count was unchanged at +0 to 987 and now trails last year by (245). The higher efficiency US horizontal rig count fell (4) to 752 and falls (170) below last year.
- Demand Trends: Total demand fell (2.5) bcf/d to +70.4 bcf/d. Power demand fell. Industrial demand rose. Res/Comm demand rose. Electricity demand fell (3,374) gigawatt-hrs to 80,770 which trails last year by (2,809) (-3.4%) and exceeds the 5-year average by 864 (1.1%%).
- Nuclear Generation: Nuclear generation fell (1,138)MW in the reference week to 89,946 MW. This is +4,638 MW higher than last year and +42 MW higher than the 5-year average. Recent output was at 84,265 MW.
The cooling season is coming to an end. With a forecast through October 11, the 2019 total cooling index is at 4,959 compared to 5,624 for 2018, 4,860 for 2017, 5,402 for 2016, 4,369 for 2015, 3,447 for 2014, 4,811 for 2013, 7,205 for 2012 and 6,706 for 2011.
