Mike et al.,
This week's NG EIA report's +62 was bearish on my scale. So, in my mind, this increases the chance that next week will be +90 or higher on the much lower HDDs. This also tells me that the chance for average injections this season being large like in 2014 and 2015 as opposed to modest like in 2016 and 2017 has increased as having +62 with there still being 79 HDD is pretty bearish vs long term history. But keep in mind that it was the first bearish report of the last 4. So, caution is advised in assuming too much bearishness from this one report. Let's see if next week's report's injection is, indeed, quite large.
For April MTD, I have April near -9. The complete April is looking to come in near +25-+50 with most of 4 days to be accounted for (most of the day 4/27 through 4/30).
It is going to be an extra interesting summer with the large storage deficit to make up. Though exports have been increasing, production is up enough to probably be the driving force until widespread summer heat (CDDs) starts to have a significant modying impact on injections.
Anyone have any predictions or comments regarding the 2018 NG injection season?
Thanks much Larry. Good to see you back.
I will have some comments and weather shortly.
Thanks, Mike! As always, I'm looking forward to your informative wx analysis as well as your thoughts and opinions even if I don't always have the same take.
Larry,
Great statistics and analysis as always by you and I agree with all of it........this time (-:
On weather, I note that whenever we have extreme weather(cold/Winter or heat/Summer) that drawdowns are often bullish surprises. Not that April was extreme cold in an absolute sense but relative to average for April in the Midwest and East it was pretty extreme cold.
Our azaleas here in S.Indiana have often been blooming by mid April and just bloomed this past week.
You mentioned this once and I thought it was mid May when CDD's become greater than HDD's.....at least climatologically in an average year.
That's what makes the pattern coming up so interesting because it will feature record heat, especially in the south, where CDD's start sooner.
So if mid/late May feature widespread heat, there will be substantial CDD's.
Check out this experimental 3-4 week outlook:
http://www.cpc.ncep.noaa.gov/products/predictions/WK34/
Hot and mostly dry across most of the country. At some point, if this comes to pass it will be bullish to ng prices.
With supplies drawn down in April instead of injections, we need to catch up. We are an incredible 903 bcf below last year at this time in storage and 534 bcf below the 5 year average.
http://ir.eia.gov/ngs/ngs.html
We would need to gain something like 30 bcf/week over the next 30 weeks to come up even with 2017.........ain't gonna happen, even with a record cool Summer.
What's most amazing is that prices are this low, with storage so low. One would think ng prices would be above $3. Obviously, the market sees massive supplies ahead ready to boost storage during the injection season.
Weather has the most impact on ng prices when storage is seasonally low. With that in mind, I am thinking that record heat this Summer will create some strong price spikes higher.
Seasonally, natural gas is very strong in March/April, flattens out /neutral in May/June, takes a nose dive thru July, then is strong again in Aug/Sept.
With all the cold in Mar/Apr, along with the seasonal and low storage, it was amazing that we did not break $3.
Technically, ng put in a major low in December 2017, followed by a big spike high, late the following month, January.
Since then, we have been trading in a contracting wedge/symetrical triangle pattern, with higher lows and lower highs for over 3 months now,.
With the apex of the triangle getting closer and closer, an upside or down side break out will have to happen soon. Will that mark the direction of a new trend?
It often does. I could see record heat in late May, if it continued into much of June, causing an upside break out, with high confidence.
If the heat continued for much of the Summer, this might define a new uptrend in prices.
A turn to much cooler, especially during July would likely result in massive injections for the time of year and prices collapsing lower.
We can't forecast weather that far out with any skill so this is just a "what if" scenario"
However, the pattern coming up is going to feature some early season big heat and unusually strong CDD's, which should be supportive for ng prices in May........despite the bearish surprise in that last storage report.