Then again, it may not. It is too early to tell and the winter heating soon is still dead ahead. The Energy Information Administration reported yesterday that the natural gas in storage totaled 3,725 Bcf, an increase of 72 Bcf versus last week's level of 3,653 Bcf. The build rate on the week came in under the consensus estimate for a build of 77 Bcf, but was more inline with my model derived guess for a 74 Bcf build (not that my guess is any better than consensus. I was just lucky for the week).
Current storage levels now sit 174 Bcf above the 5-year average of 3,551 Bcf, and improvement from 185 Bcf last week. Here is the trend in the difference between current storage levels and the 5-year average.
Current storage levels now sit 174 Bcf above the 5-year average of 3,551 Bcf, and improvement from 185 Bcf last week. Here is the trend in the difference between current storage levels and the 5-year average.
Looking at the chart, storage rates looks to have resumed their convergence towards the 5-year average. However, this follows a flattening trend seen in September. In addition, future storage levels will greatly depend on the heating demand generated by cold temperatures. Although most forecasts are calling for a colder winter than last year, mother nature may still throw a curve ball and the forecasts could be prove wrong.
Lastly, the difference in current versus average storage levels continues to moderate. In addition to the above chart, I also track the 12-week slope of the differential figures.
The moderation trend should be readily apparent.
The price of natural gas continues upward, currently at $3.62 per MBtu. I am of the opinion that if a colder winter does not materialize, which clearly the market is anticipating, then natural gas prices will moderate.
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