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March 9 Natural Gas Weekly: Storage Forecast And Update On Supply/Demand Balance

Mar. 08, 2018 5:13 PM ETBOIL, DCNG, DGAZ, FCG, GAZ, KOLD, UGAZF, UNG, UNL9 Comments


  • Total demand for American natural gas is up 15.0% y-o-y to 650 bcf.
  • Total natural gas supply is up 8.0% y-o-y to 86.2 bcf per day.
  • We currently expect EIA to report a draw of 91 bcf next week.

This report covers the week ending March 9, 2018. Daily data for March 3 to March 8 is estimated. Daily data for March 9 is forecast.

Total Supply/Demand Balance

We estimate that aggregate demand for American natural gas (consumption + exports) totaled around 650 bcf this week (up 6.0% w-o-w and up as much as 15.0% y-o-y). The deviation from the norm stayed positive and increased from +3.0% to +14.0% (see the chart below). According to our calculations, aggregate demand for U.S. natural gas (on a weekly basis) has been above 9-year norm since February 24, 2017. This week, colder weather returned and the number of heating-degree-days (HDDs) jumped by no less than 15% w-o-w, while the number of cooling-degree-days (CDDs) dropped. Heating demand was especially pronounced in the Southeast part of the country, where we have witnessed the most rapid increase in HDDs. Total exports dropped 4.0% w-o-w, primarily due to weaker pipeline flows into Canada. However, the weekly decline is also partly exacerbated by a very high comparison base from previous week. According to Marine Traffic data, no less than four LNG tankers (total natural gas carrying capacity of 13 bcf) departed from Sabine Pass over the past seven days. In annual terms, total exports were up 21%.

* norm defined as simple average over the last nine years. Source: Bluegold Research

We estimate that dry gas production has been expanding in annual terms for 40 consecutive weeks now. However, the growth rate has slowed down lately partly due to temporary pipeline maintenance and partly due to production freeze-offs in Bakken region. Currently, we estimate that dry gas production will average 78.5 bcf/day in March, 78.9 bcf/day in April, and 79.1 bcf/day in May. The aggregate supply of natural gas (production + imports) averaged just around 86.2 bcf per day for the week ending March 2 (up 8.0% y-o-y). Overall, total supply/demand balance

Thank you for reading our weekly report. We also write a daily update of our forecast for key natural gas variables: production, consumption, exports, imports, and storage. Interested in getting this daily update? Sign up for Natural Gas Fundamentals, our Marketplace service, to get the most critical natural gas data.

This article was written by

Bluegold Trader profile picture
Bluegold Trader (BGT) is an independent provider of public market information and trading analytics. BGT is a one-stop shop for all your research needs in energy and forex trading.

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Comments (9)

Amazing as the Northeast digs out from a heavy snow, it looks like they get another storm coming in early next week.
RELENTLESS demand expansion and storage withdrawals that are knocking on triple digits once again.
LuvMyBonds profile picture
-and another Northeaster has just hit the northeast US.
Steve Frechette profile picture
And yet prices can't get any traction to the upside!!

UGAZ back under $60 pre-market.

@AW, the only relentless thing happening for natural gas in 2018 is production expansion.

Demand from Mexico and LNG exports are non events for 2018, maybe 2019 will be different.

Keep in mind power burn is price sensitive and you can't use up the excess gas unless you keep prices below $3. We learned in 2016-2017, coal resources come online when gas prices climb over ~$3.

Good luck to all!
Relentless = 15% increase in natural gas demand year-over-year. Production growth is at a lower rate than this over the same time frame.

Natural gas is one of the very few commodities with a decades-long demand growth profile.
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