Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised that there was an injection of 46Bcf (billion cubic feet) into Underground Storage for the week ending September 21st, 2018.

This is 16Bcf below the median forecast of a 62Bcf injection, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The injection one year ago was 58Bcf and the 5-year average injection is 81Bcf. Storage is 690Bcf below last year for the same week and 621Bcf below the 5-year average. Working gas in storage stands at 2,768Bcf. As of today, we estimate that dry gas production has been expanding (annual terms) for 68 consecutive weeks. The October Natural Gas contract closed at $3.02.

Natural Gas Pricing


As of 9:36AM CST, November 2018, (the new prompt month) Natural Gas was trading at $3.06, +$0.14 from one week ago and the 1-Year Spread average was $2.85, +$0.06 from one week ago.

Crude Oil Pricing


As of 9:50AM CST, November, 2018, (the new prompt month) Light, Sweet Crude on the NYMEX was at $71.88, +$1.07 from one week ago.

Crude Oil Inventory


US crude inventories increased by 1.9 million barrels to 396.0 million barrels for the week ended September 21st, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected a drop of 1.5 million barrels.

U.S. Rotary Rigs


U.S. Rotary Rigs drilling for natural gas were unchanged at 186 for the week of September 21st. The number of rigs currently drilling for Natural Gas was -4 from last year. US Rigs drilling for oil were -1 at 866. There are 122 more rigs targeting oil than last year. Canadian rigs were +29 at 197 for the week. Rigs targeting oil remain 82% of all US drilling activity.

Geopolitical


Can we predict technology’s impact on the energy market? What are the challenges and opportunities involved in finding better ways to judge the strengths and weaknesses of competing energy technologies, and how can good data improve how the world moves forward with them? Elliot Gardner speaks to MIT professor Jessika Trancik, who specialises in evaluating energy technologies and their potential to address energy and climate needs, to find out.

US energy policy has been in flux over the last few years, from the infamous withdrawal from the 2015 Paris Agreement on climate change last year, to President Trump’s commitment to the American coal industry and California Governor Jerry Brown’s mid-September signing of executive order B-55-18 pledging California to carbon neutrality by 2045. The state of US energy, and indeed that of the rest of the world, is increasingly difficult to predict.

Weather

The AccuWeather 1-5 day Outlook forecasts above-normal temps for the Eastern and Western US with the the Central US at below-normal temps. The 6-10 Day Outlook shows the country at above normal Temps with the exception of part of the Southwest, California and part of the North-Central states, which will be at below-normal temps.

11-15 Day Outlook  forecasts most of the Eastern US at above-normal temperatures with below-normal temps for the North-Central states. The balance of the country is projected at mostly normal temps. The 30-day Outlook projects normal temps for most of the US with the exception of the Northeast  and Northwest, which are expected to be at above-normal temperatures.

The 90-Day Outlook shows normal temps for the entire country, with the exception of the Northeast and Far-North Central States, which are expected to be above-normal.

Sustainability and Renewables


Ground-breaking renewable fuel refinery announced: Refinery to turn 280,000 tons of North Dakota wheat straw to fuel. NewEnergyBlue is about six months away from breaking ground on a ground-breaking renewable fuel refinery. New Energy Spirit Biomass Refinery is forecast to turn 280,000 tons of North Dakota wheat straw into 16-million gallons a year of some of the lowest carbon auto fuel selling in California, the world's fifth largest market. 

Underway soon near Jamestown, North Dakota, New Energy Spirit Biomass Refinery is designed to process 280,000 tons of agricultural wastes a year to produce low-carbon fuel ethanol.

"It's no secret that clean energy producers covet the state's monster fuel market," stated Thomas Corle, Blue's chief executive officer. "Carbon is the California regulator's primary yardstick.

This Week's Key Take-Away


Natural Gas prices have continued to rise this week and today's injection into underground storage was far below expectation. We now expect prices to rise again in the near-term.

As we enter the "shoulder" months, we expect Natural Gas and Electric usage to drop, as heating and air-conditioning are not used as much as in the summer and winter. That said, we saw a smaller-than-anticipated storage report at a time that the US is producing a record amount of Natural Gas. 

Natural Gas has broken through the $$3.00 mark for the prompt month and while dropping back yesterday, has this morning advanced above $3 again. We see resistance at $3.05 and expect it to continue to trade in a narrow bandwidth.

While this is the expectation, technical movement has outweighed fundamentals in recent weeks, so we will continue to closely monitor the market.



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