Reasons to Buy:
- Structural demand is projected to continue increasing.
- Both takeaway capacity from the Northeast and LNG export capacity are increasing.
- When you strip away the effects of the bearish weather we’ve experienced, the supply/demand balance easily flips to bullish.
- Moving into warmer months, cooling demand will have an increasingly stronger influence.
Reasons to Wait:
- Forecasts of wet weather may keep the Northeast from getting too hot this summer.
- Shoulder season continues on: Next 2 weeks are projected to be cooler than normal for most of the US.
- With natural gas production growth projected and significantly higher rig counts versus last year, the market could fall if incremental demand doesn’t show up.
Gas Market Highlights:
- Last week was the 7thstorage report and 7th injection of the 2016-17 Injection Season. Injection (75 BCF) was below analysts’ expectations (63-70 BCF). Storage is now 371 BCF below last year’s level and 241 BCF above the 5 year average.
- Year over year deficit has decreased 1.07% since the previous week.
- Surplus over 5 year average has decreased 5.9% since the previous week.
- July 2017 NYMEX trading at 3.145 after opening at $3.25.
- 0-3 below normal across the US for the next two weeks.
Note: Although natural gas does not necessarily indicate where electricity pricing is at, it is good as a general barometer for electricity markets as a whole. When gas gets expensive, so does electricity generated from natural gas.