Replies to This Discussion

Permalink Reply by jim weyland on March 13, 2014 at 7:46

that 'pull' seems a bit high to me for this time of year. lots of times the eia revises their numbers a week later.

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Permalink Reply by tc on March 13, 2014 at 8:09

My guess is we end at 864 BCF.

I was looking at one of your post on 1/29/14 where you said it would be bullish to be under 1.4 TCF, which I would have agreed with at the time.  Here we are, going to be under 1 TCF and the NG prices ($4.37) are tanking.  The prices are acting as if we had a warm winter and just need to top off the storage tanks.

If the NG industry is willing and able to fill the storage, about 3 TCF, during the 7 month injection season for a sub $4.50 price, then it doesn't bode well for future price increases.  The industry needs to stop leading people to believe that no matter how much NG we use they can always replace it at a cheap price. 

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Permalink Reply by tc on March 20, 2014 at 0:34

Before the 10:30 report, I am going to change my WAG to 804 BCF.  The temperatures have been on a roller coaster, but in general I think they are colder than average.

A couple of variables I wonder about are did E&P increase NG production in the last month.  Can pipelines stockpile NG, I mean is the amount of NG in the nations pipelines the same every day or can it vary.  With the hundreds of thousand of miles of various sizes/types of pipelines, even a few % differences of fullness could equal a lot of BCF.

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Permalink Reply by IRielley on March 13, 2014 at 8:34

tc, your question is a good one. "Drilling down" a little further, the further question seems to be whether sub $4.50 prices will be sufficient incentive to spur the kind of huge ramp up that will be needed to replenish the storage facilities by November?

Sure, some producers will increase activity for $4.50, but it's hard to see a wholesale flood of new gas at that price. Am I missing something?

Also, here's a great website that suggests we have 3 more weeks of draws ahead: natgasweather.com

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Permalink Reply by jim weyland on March 13, 2014 at 8:52

thanks, that's a good site/resource.

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Permalink Reply by tc on March 13, 2014 at 9:26

Another question is how much more NG will be injected into pipelines where E&P operators chase after $100 oil & $50 NGLs.  Almost all oil fields produce NG, in fact a higher GOR (gas to oil ratio) is perceived as a positive as it provides more energy to lift the oil.  So while $4.50 NG may not drive large production increases, $100 oil may.

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Permalink Reply by adubu on March 15, 2014 at 14:24

prediction season ends with 775 bcf in storage and they will not be able to completely fill storage  above 3.2 tcf by next withdraw season this winter if we have a HOT summer. Prices should be stable in $5+ range next fall and next several years. Plus increase demand with about 3-5 Bcfd LNG Export ( ~1+ Tcf per year to start with) starting late 2015 early 2016

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Permalink Reply by cocodrie man on March 18, 2014 at 1:59

I am one who will be an eternal novice as regards the factors impacting the price of natural gas.  Even so, I am trying to better understand the myriad of factors that impact these prices.  I have at least two naive questions to which responses would be helpful.  First, what is the "strip" that writers talk about?  Second, would you briefly explain how "profit takers" situate themselves to make a profit off natural gas prices rise and fall?  Thank you for your assistance.

CM

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Permalink Reply by adubu on March 18, 2014 at 2:28

CM--- The "strip price" It is the average of the daily settlement price of the next 12 months futures contracts for natural gas.

profit or losses in nat gas futures is simple based on the trader's speculation of what they think market prices will be in months or years in future. Using fundamental or technical charts to guide their trades  

Large oil & Gas operators use futures to lock in sell price of their production based on economics of wells they drill to cover cost + lock in at least a level of profit if the wells EUR is calculated correctly. Sometimes they leave money on table when prices increase and other times they hedge correctly when prices drop 

so there are basic two types groups in future market--- Traders and Operators 

Good example of Traders is what happen few weeks ago when traders who were short the market had to cover their trades and prices Spiked to almost $6.50 and then rapid sold back off to > $5 and now at about $4.45 

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Permalink Reply by adubu on March 15, 2014 at 14:28

tc--- a lot of fields like the Bakken do not have pipelines for the Nat Gas so it's flared 

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Permalink Reply by tony allen on March 16, 2014 at 8:06

Here is an article about the Bakken flaring.

http://www.rigzone.com/news/oil_gas/a/132092/OG_Industry_Responds_t...

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Permalink Reply by JHH on March 18, 2014 at 2:02

It will drop to 860 BCF.give or take 20 BCF.  That's my story and i'm sticking to it.

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