August 19, 2016 – NGI
The Worst May Be Over But NatGas Recovery Will Be Slow, Sometimes Painful
By: Leticia Gonzales
While it seems the natural gas and oil industry is convinced that the worst is over and markets are on their way to a comeback, the only certainty is that the road to recovery is going to be a long, bumpy one…
Read the full story here: http://www.naturalgasintel.com/articles/107467-the-worst-may-be-over-but-natgas-recovery-will-be-slow-sometimes-painful
…As always, weather is the real wild card in the natural gas recovery.
Back in April, natural gas storage inventories were starting out the injection season at a nearly 1 Tcf surplus over year-ago levels after the warmest winter on record. Fears in the industry mounted regarding the storage overhang, and whether storage facilities would be able to cope with the abundance of gas hitting the market.
But thanks to La Nina, this summer has turned out to be one of the hottest on record, driving up natural gas power burn to record levels…and keeping storage inventories in check. While most in the industry had pegged storage inventories exiting the injection season at more than 4 Tcf, many now are calling for end-of-season stocks to fall closer to 3.9 Tcf.
Looking ahead, weather could prove favorable for the natural gas market yet again if conditions turn chilly quickly.
“Temperature-adjusted demand has been very strong and if that incremental demand sustains on a per-degree basis and we get a cold winter, the storage scenario could get pretty bullish pretty quickly next year,” said RBN’s Sheetal Nasta, energy analyst. “So it’s possible the demand side will keep a floor under prices.”
