It was another disappointing day of trade for the natural gas bulls as the market sank to yet another 2-year low in today's trade.
The weekly storage withdrawal reported today by the EIA for week ended 01-30 was 115 Bcf, the second consecutive weekly withdrawal that came in near the lower end of pre-report estimates.
Colder weather in the Northeastern U.S. has not been enough to drawdown domestic stocks which at 2,428 Bcf are nearly 25% above last year's level. With 8 weeks left in the current withdrawal season which ends the last week of March, domestic stocks this year should fall in the 1,500-1,600 Bcf range which would be very close the 10-year average for end of March stocks of 1,565 Bcf.
Last year's storage injections during April-October reached a record high of 2,748 Bcf. But with end of March 2014 stocks at an 11-year low of 822 Bcf, storage at the end of 2014 peaked at 3,611, just below the 10-year average for peak storage of 3,668 Bcf.
Production this year has also been running 12%+ above 2014 putting an additional 6-9 Bcf per day of gas onto the market relative to 2014. This unexpected increase in production has been the primary reason the natural gas market has remained weak.
Utility demand for natural gas this summer should be higher than 2014 as lower natural gas prices make gas more competitive with coal for power generation. This could help drawdown stocks an additional 2-4 Bcf per above last year.
But with record high production, domestic stocks which could reach an all-time high by the end of 2015, the natural gas market could revisit the lower-$2.000/MMBtu level before a final low is set.
No comments:
Post a Comment