Gas Market Update – Early June

Published: June 12, 2017

Reasons to Buy:

  • Weather normalized demand continues to grow.
    • Both takeaway capacity from the Northeast and LNG export capacity are increasing.
  • Moving into warmer months, cooling demand will have an increasingly stronger influence.

Reasons to Wait:

  • Current forecasts for average summer temps may keep 5 year surplus intact heading into winter.
  • With natural gas production growth projected and significantly higher rig counts versus last year, the market could fall if incremental demand doesn’t keep up.

Gas Market Highlights:

  • This week was the 9thstorage report and 9th injection of the 2016-17 Injection Season. Injection (106 BCF) was below analysts’ expectations (90-105). Storage is now 332 BCF below last year’s level and 237 BCF above the 5 year average.
    • Year over year deficit has decreased 10.3% since last week.
    • Surplus over 5 year average has increased 5.3% since last week.

  •   July 2017 NYMEX closed at 3.044 after opening at $3.034.

Weather Highlights:

  • Next 7 days:
    • 0-6 above normal in the Northeast and Midwest, 0-3 below in the Southeast.
  • Week following:
    • 1-2 degrees above normal in the Northeast, 0-3 below normal in the Midwest.

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.

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