Natural Gas & Utility Generation

Natural gas prices rallied on Friday, as traders reacted to the latest weather forecasts, which are calling for colder than normal temperatures through March 11th.  We are supposed to experience more moderate readings this week in the Northeast, but our bet is that it isn’t going to feel especially balmy this week.  The trend is for cold readings.

From Friday through next Thursday, temperatures are predicted to be colder in the Northeast, Midwest, Southeast and in Texas.  That is the pattern that has given us large draws in the recent past.  As far as we can tell, the colder weather trend is alive and well and could provide us with one or even two more good draws that can help build on this season’s positive reports.

There may be some ‘slippage’ in the next two or three reports.  But, right now, underground storage levels are 56 bcf and 2.93% lower than a year ago, and 13 bcf and 0.71% above the five-year average.  For this week, the five-year average is a draw of 112.6 bcf, while a year ago there was a draw of 102 bcf.  Those figures a year ago left storage levels 270 bcf and 17.73% higher than year earlier levels and 218 bcf and 13.84% above the five-year average.  Those figures launched the surpluses that are just now being eaten away.  They justified low prices a year ago; today, the numbers would seem to suggest higher quotes.

Courtesy Peter Beutel

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