Natural gas traded up $0.029 to close at $8.074 on a bigger than expected (and in fact all time record) withdrawal of 274 Bcf. The Street was at 250 Bcf; I was at 225 to 275 Bcf. All three regions are below year ago storage levels and the West region is 3.7% below its five year average for this time of year. Trading was more focused on the early pain in the broad markets, oil, and on the fact that the weather forecasts "currently" call for a warming trend.
Here's Where Storage Stands Now:
The Deficit to Year Ago Storage Levels Increased To 12.9% Which Although Interesting ...
... Isn't Nearly As Powerful As The Destruction of the Surplus to the Five Year Average. The surplus is only a quarter of what it was this time last year given the help of a hot summer and now, a cold winter.
Tough Comps: 1 Down, 3 To Go. Next week will likely yield a small reversal in the YoY deficit but a continued deterioration in the level versus the 5 year average. While gas is still likely to weaken into the mid $6's with the slack demand of the first shoulder season this destruction of the "storage overhang" will help to produce favorable pricing comparison's relative to last summer. The CPC has underestimated the cold of this winter for five of the last six weeks. Keep that up much longer and the old E&P complaint of , "oh, if only we could have a normal winter" may go by the wayside.
