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Natural gas market update to end 2017 - EIA

Gasoil News - Published on Tue, 02 Jan 2018

Image Source: Wikimedia
1. We continue to drop, prices have fallen nearly 20% since November 10

2. January contract expires today and stood at just USD 2.64 per MMBtu as of yesterday (prices this morning are now up to USD 2.73)

3. Remember, last year January contract expired at $3.93

4. These are the lowest numbers we have seen since February, and there is no USD 3 gas on the board until January 2021

5. EIA latest forecasts has Henry Hub prices averaging $3.12 this year and $3.24 in 2018

1. In short, it just hasn’t been cold enough for an extended period of time to up prices

2. Per the American Gas Association, 10 of the 12 weeks since October 7 have been warmer than normal

3. But, the 6-10 day map is blue and dark blue in the eastern half of the country, meaning colder weather is coming (Chicago will be in the teens over the next week, with NYC in the 20s) although pretty normal temps forecast after that

1. We had a 182 Bcf withdrawal reported last week, which was significantly above the 125 Bcf mark for the five-year average

2. We are now 5% below where we were last year for gas inventory, and 2.4% below the five-year average

3. The coming withdrawal reported tomorrow is expected to be about average (~115 Bcf), but a huge withdrawal of possibly over 210 Bcf is expected to be reported next week, way above the five-year average of 99 Bcf

4. So the storage deficit has started to slightly grow again, and the current gas market could easily flip

1. Just over a week ago, total gas demand for this December was about 6% lower than where it was last December, but some colder temps have pushed our demand this month to being about 1-2% lower

2. Total gas demand is expected to increase about 18-20% in the next two weeks to around 120 Bcf/d based on more heating

3. Piped exports to Mexico have reached historic levels of 4.5 Bcf/d in recent days but are still being blocked by infrastructure constraints, with LNG feed gas use still hovering in the 3 to 3.3 Bcf/d range (Cove Point, our second LNG export facility, starts commercial operations in early-2018)

1. US gas production has been at the 77-78 Bcf/d range, compared to 70-71 Bcf/d for the first half of the year

2. We are now at the highest gas production level ever and highest oil production levels since 1971 (the latter critical to helping associated gas output in Texas)

3. Don’t forget that more demand begets more production, so the largest incremental demand market of exports will help increase production – with more pipelines and higher prices themselves helping to increase output as well

4. Let by Appalachia producing 26.4 Bcf/d in January, rising production is clearly the lid on the gas market, and EIA has us averaging a whopping 80 Bcf/d next year, compared to 73 Bcf/d this year – going forward, our production should increase about twice as fast as our demand

5. Now closing in on producing 2.2 Bcf/d, don’t sleep on the oil-based Bakken play in North Dakota for gas, up from 1.6 Bcf/d a year ago – although more pipeline capacity and gas plants are needed in the region.

Source :

Posted By : Rabi Wangkhem on Tue, 02 Jan 2018
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