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Permalink Reply by Lee White on February 7, 2013 at 19:59

When oil supplies fall prices go up. So why are prices falling when natural gas supplies fall?

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Permalink Reply by adubu on February 8, 2013 at 1:14

Lee --- during winter months more gas is used and results in draw down from storage supplies. During Fall and Spring there is injection into storage so supplies increase. The greater the draw implies greater demand of usage due primary cold weather. If weather not as cold as predicted then draw not as great so supplies in storage higher (greater supplies available than expected demand due to greater production or less usage) price is simple supply/demand.So on your question price drop because draw down ONLY 118 vs. expected draw of 122-126 BCF resulting in remaining supply > than future demand presently. If the draw had been higher that expected say for example in 130-135 BCF then there would have been a spike higher on Nat Gas prices

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Permalink Reply by JHH on February 8, 2013 at 2:49

Do you think the winter drawdown and summer build will change as utilities change over to natural gas for power generation?  Seems like the draw will be year-round instead of seasonally... more of a balance draw.  Just a thought.

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Permalink Reply by tc on February 8, 2013 at 4:14

If you have a draw year round, you would have no storage.  One reason utilities are reluctant to move away from coal fired plants is that they can store massive amounts of coal on-site, but for NG they are dependent on pipelines and sometimes far away storage facilities.

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Permalink Reply by adubu on February 8, 2013 at 15:39

TC and JHH the USA has too much gas for storage to ever drop to flat stable levels year round --- if rig count increased in gas field could easily fill storage to max >4 TCF and then have to shut in wells or lay down the rigs even if no coal was used for next decade. Export LNG would help to some degree. The operator will learn to manage their drilling to keep production to the demand level at profit % --will see NG stabilize in $5 range over next couple decades then increase slightly due to inflation but never equal true inflation IMO

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Permalink Reply by adubu on February 14, 2013 at 7:29

10:36AM      UPDATE for Week ending 8 Feb

Natural-gas prices fall further after EIA data ( NGH13 ) by Myra P. Saefong

SAN FRANCISCO (MarketWatch) -- Natural-gas futures extended losses Thursday after the Energy Information Administration reported a decline in U.S. inventories that was a bit less than expected. Supplies fell 157 billion cubic feet for the week ended Feb. 8, the EIA said. Analysts polled by Platts forecast a decline between 160 billion and 164 billion cubic feet. Total stocks now stand at 2.527 trillion cubic feet, down 270 billion cubic feet from the year-ago level and 348 billion cubic feet above the five-year average, the government said. March natural gas (ngh13) was at $3.19 per million British thermal units, down 12 cents, or 3.5%. It was trading around $3.28 shortly before the data

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