Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised that there was a withdrawal of 86Bcf (billion cubic feet) from Underground Storage for the week ending March 16th, 2018.

This is 4Bcf below the median forecast of a 90Bcf withdrawal, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The withdrawal one year ago was 137Bcf and the 5-year average withdrawal is 53Bcf. Storage is 667Bcf below last year for the same week and 329Bcf below the 5-year average. Working gas in storage stands at 1,446Bcf.

Natural Gas Pricing


As of 9:36AM CST, April 2018, (the prompt month) Natural Gas was trading at $2.64, -$0.16 from one week ago and the 1-Year Spread average was $2.85, -$0.04 from one week ago.

Crude Oil Pricing

As of 9:21AM CST, April, 2018, (the prompt month) Light, Sweet Crude on the NYMEX was at $64.52, +$3.08 from one week ago.

Crude Oil Inventory


US crude inventories declined by 2.6 million barrels to 416.3 million barrels for the week ended March 16th, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected an increase of 3.3 million barrels.

U.S. Rotary Rigs


U.S. Rotary Rigs drilling for natural gas were +1 at 189 for the week of March 16th. The number of rigs currently drilling for Natural Gas was 32 higher than last year’s level of 157.  US Rigs drilling for oil were +4 at 800. There are 169 more rigs targeting oil than last year. Canadian rigs were -57 at 219 for the week. Rigs targeting oil remain at 81% of all US drilling activity.

Geopolitical


As senior officials from the Organization of Petroleum Exporting Countries (OPEC) gather in Houston for the international industry gathering CERA Week, they will be listening carefully to speeches by the CEOs of the largest U.S. independent oil companies about the prospects for the rise in U.S. production in 2018 and 2019. Likely, they won’t like what they hear. U.S. industry leaders are saying U.S. shale production could add another one million barrels per day (b/d) or more on top of already substantial increases, if oil prices remain stable. Best C-suite guesses from Texas are that a sustained $50 to $60 oil price could result in a fifteen million b/d.

Weather

The AccuWeather 1-5 day Outlook forecasts below-normal temperatures for the entire Eastern third of the US and Northwest. The South-Central part of the country is projected to be at  above-normal temps. The 6-10 Day Outlook forecasts New England at below-normal temps, as well as parts of the central portion of the country.

The 11-15 Day Outlook forecasts most of the Northern US at below-normal temps with most of the Southern states at above-normal temps. The 30 and 90-day Outlook projects the Southern states at above-normal temps and normal temps for the balance of the US.

Sustainability and Renewables


MIT announced yesterday that it and Commonwealth Fusion Systems -- an MIT spinoff -- are working on a project that aims to make harvesting energy from nuclear fusion a reality within the next 15 years. The ultimate goal is to develop a 200-megawatt power plant. MIT also announced that Italian energy firm ENI has invested $50 million towards the project, $30 million of which will be applied to research and development at MIT over the next three years.

The extremely high temperatures require that magnetic fields, rather than solid materials, confine the hot plasma in which the fusion reactions take place. MIT and CFS plan to use newly available superconducting materials to develop large electromagnets that can produce fields four-times stronger than any being used now.

This Week's Key Takeaway

The 4th(!) winter storm in March in the Northeast has caused chaos for electric utilities attempting to restore power. This was one of the heaviest late March snowstorms in decades in some locations, including New York City's Central Park, which picked up 8.2 inches of snow, the first time they had picked up at least 6 inches from a snowstorm in late March or April in 26 years (March, 19, 1992). The storm dumped a foot or more of snow in at least five states, with heavy snow stretching from Long Island to the Appalachians to parts of the Ohio Valley.

So... the 2nd day of Spring. Continued cold weather in the Northeast will likely delay the start of the Natural Gas Storage Injection season, which normally begins April 1. Last week however, Natural Gas withdrawal was 53 Bcf below 2017.

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