Title : Natural Gas Inventories "Dangerously Low" -- Contributor Over At Oilprice -- August 25, 2018
link : Natural Gas Inventories "Dangerously Low" -- Contributor Over At Oilprice -- August 25, 2018
Natural Gas Inventories "Dangerously Low" -- Contributor Over At Oilprice -- August 25, 2018
The following was previously posted, just a few days ago.NG fill rate, link here. I still think this is going to be the most interesting metric to follow this winter. If it's a cold winter, and if storage rates fall outside the historic minimum going into November, and if the US shale natural gas operators can meet natural gas demand this winter, it means tracking natural gas fill rate is almost meaningless:
If this is a cold winter, it will be interesting to see if the natural gas sector can respond. It it is a cold winter and the natural gas sector responds "without missing a beat," it will suggest to me that the tracking of this metric is absolutely unnecessary.
Having said that, look at this article today from "Ag Metal Miner" over at oilprice.com:
Futures markets are suggesting the currently benign level of natural gas price volatility may not remain through the winter months.
According to the Financial Times, market volatility this year has been the lowest on record despite inventory levels falling 19.5 percent below average and by the time winter starts are set to be at their lowest in more than a decade.
The Financial Times puts this down to investors being lulled into complacency by a seemingly unstoppable wave of new supply from the shale market rising inexorably to meet rising demand.
The government last week forecast 81.1 billion cubic feet per day in dry gas production for 2018 — a record high — and up by 7.5 billion cu ft/d from 2017.
But is the market safe to assume shale gas will supply regardless of demand?
Natural gas producers are systematically hedging their sales throughout next year, often a sign they plan to continue an aggressive policy of drilling and expansion.
That activity has contributed to a dipping of forward prices, as there are more sellers in the futures market than buyers.
But inventory levels are low — some would suggest dangerously low — after a high summer demand due to hot weather increasing demand for air conditioning. Natural gas “power burn” surged to a record 37.7 billion cubic feet per day during July, the Financial Times reports.So, we'll see.
The FT story is behind a paywall. I could not get to it "thru" oilprice.com but I was able to google and get to it "thru" a Yahoo link.
From the FT article:
When US natural gas futures passed a milestone this month, they did so quietly: volatility fell to the lowest levels since the market’s debut nearly 30 years ago.
The event seemed improbable. Volatility usually fades when commodity stocks are ample. Yet US gas stocks are 19.5 per cent below average.
When the winter starts they are set to be at their lowest in more than a decade. This situation is the latest example of how the world’s largest gas market has been transformed by shale drilling. While demand for gas is galloping, it has been met by waves of supply that show no sign of abating. Conditions that put traders on edge a decade ago get shrugs.And that's way I think it will be fascinating to watch this play out this winter. Especially if it's a cold winter.
Wow, I love to blog.
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