Natural Gas Weather And Storage Outlook

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Includes: BOIL, DCNG, DGAZ, GAZ-OLD, KOLD, UGAZ, UNG, UNL
by: Robert Boslego

Summary

Build of 4 bcf expected to be reported this week.

End-of-season storage now up to 2,100 bcf.

Downside risks remain strong.

The National Oceanic Atmospheric Administration (NOAA) released its update for heating degree days (HDDs). The natural gas-weighted HDDs for the heating season through February 25th, NOAA estimates that HDDs are 19% below normal, and 3% less than last year.

For the week ending March 4th, it forecasts HDDs will be 20% below normal and 4% lower than the same week last year.

Looking ahead, market expectations for storage changes for the week ending February 25th is a build of 4 billion cubic feet (bcf). That compares unfavorably to a draw of 67 bcf last year and a 5-year average draw of 132.

In the 4-weeks ending March 17th, the data show a drop of 123 bcf. This average is 3 bcf slower than the same weeks last year, and about 251 bcf slower than the five-year average.

Storage Changes

2017

2016

5-Year

2/24/2017

4

-67

-132

3/3/2017

-65

-63

-136

3/10/2017

-45

-9

-85

3/17/2017

-17

13

-21

Total

-123

-126

-374

In total, natural gas storage draws are projected to total 1,730 bcf through March 17th. That compares favorably to last year but is a smaller total draw compared to the prior three years.

Cumulative Natural Gas Storage Drawdowns (NYSE:BCF)

2012/13

2013/14

2014/15

2015/16

2016/17

04-Nov-16

21

37

40

15

54

11-Nov-16

3

55

23

24

84

18-Nov-16

-34

10

-139

-29

82

25-Nov-16

-31

-4

-161

-105

32

02-Dec-16

-103

-166

-212

-139

-10

09-Dec-16

-101

-246

-275

-171

-157

16-Dec-16

-183

-531

-325

-229

-366

23-Dec-16

-254

-708

-351

-342

-603

30-Dec-16

-390

-804

-482

-510

-652

06-Jan-17

-591

-962

-717

-688

-803

13-Jan-17

-740

-1,250

-934

-899

-1,046

20-Jan-17

-911

-1,355

-1,028

-1,051

-1,165

27-Jan-17

-1,105

-1,595

-1,143

-1,121

-1,252

03-Feb-17

-1,223

-1,855

-1,303

-1,284

-1,404

10-Feb-17

-1,381

-2,086

-1,413

-1,401

-1,518

17-Feb-17

-1,507

-2,335

-1,633

-1,449

-1,607

24-Feb-17

-1,678

-2,431

-1,862

-1,506

-1,603

03-Mar-17

-1,825

-2,583

-2,060

-1,507

-1,668

10-Mar-17

-1,969

-2,777

-2,103

-1,492

-1,713

17-Mar-17

-2,031

-2,826

-2,092

-1,517

-1,730

24-Mar-17

-2,126

-2,884

-2,110

-1,505

31-Mar-17

-2,220

-2,955

-2,095

-1,508

The end of season storage level is now expected to be 2,100 bcf. That is 377 bcf lower than last year, but 302 bcf higher than the 5-year average.

End of Draw (BCF)

2017

2016

5-Year Average

Max

Min

7-Apr

2100

2477

1798

2482

837

Looking further down the road, the market now expects storage to peak at 3,700 bcf in the fall. That is 309 bcf lower than the same week a year ago and 161 bcf lower the 5-year average.

End of Storage (BCF)

2017

2016

5-Year Average

Max

Min

3-Nov

3700

4009

3861

4009

3588

Conclusions

The storage outlook gas deteriorated further, with ending storage now up to 2,100 bcf. Seems there is more downside risk ahead.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.