Wednesday, November 21, 2012

Natural Gas Withdrawal Season Has Started

Great storage report this week,

"The EIA reported a 38 Bcf net withdrawal from storage last week, bringing the level of working gas in storage to 3.873 Tcf. The weekly withdrawal compared favorably to benchmarks, being 47 Bcf lower than last year (+9 Bcf) and 41 Bcf lower than the five year average (+3 Bcf). The current storage level is 0.6% above last year (3.849 Tcf) and 4.5% above the five year average (3.705 Tcf)."
Wow, so an early start to withdrawal season! Read this article too,
"'38 bcf is a game changer,' [...] 'That is stronger than weather patterns would have suggested...'"
And here's a great chart showing how much better the withdrawals are year-over-year. If serious production declines have begun, and this isn't just from colder weather, then natural gas has entered a new part of the cycle. February 2013 gas is back above $4/mcf, and is clearly in a powerful rally.

The 3-month NOAA climate outlook is for slightly warmer winter temperatures in the SW (not big gas heating consumers) and normal to slighly cooler temperatures in the important midwestern and NE states.

We may have seen the last time that the CHK preferred trades below $75...

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