When the Energy Information Administration (EIA) releases its storage report on Thursday for the week ending June 14, analysts at Stephen Smith Energy Associates predict it will show natural gas storage at 2,435 Bcf, an increase of 88 Bcf from EIA’s previous report.
The net effect would be about a 5 Bcf storage deficit decrease, based on 2006-2010 storage norms, to a deficit near 5 Bcf, compared to a surplus of 578 Bcf a year ago, the analysts said.
The Cooling Degree Day (CDD) outlook for this month “has been gradually eroding and as a side effect, CDD expectations for the rest of the summer are also pulling back a bit,” the analysts said in their Weekly Gas Outlook on Friday. In addition, weekly consensus storage build estimates have missed to the high side for the past 6-7 weeks, causing Stephen Smith to lower its estimated summer gas-to-coal generation ration.
“The net result is that our estimated peak fall storage has increased from a previous level of 3,550 Bcf to a current level of 3,650 Bcf (while our estimated CDDs for the same period remain at 5%-higher-than-normal),” they said. “Along with recent minor near-term TDD [Total Degree Days] effects, the impact of this change was to reduce our estimated Jul/Aug/Sep strip from $4.12/MMBtu last week to $3.85/MMBtu this week.”
In the most recent EIA Weekly Gas Storage Report, for the week ending June 7, EIA reported a build of 95 Bcf, bringing stocks to 2,347 Bcf, compared with 2,934 Bcf in the year-ago period and the 2,405 Bcf five-year average.
A U.S. natural gas storage surplus of 463 Bcf on Feb. 15 had tumbled to a 32 Bcf deficit by May 24, a 495 Bcf decline that “ranks among the strongest we have seen, and oddly, the timing was in the late winter and early spring,” Smith’s analysts said earlier this month (see Daily GPI, June 7).
Analysts at Smith’s and several other firms this spring have raised their price forecasts through the rest of 2013 (see Daily GPI, April 10; April 9; April 8; April 5; April 4). The reasons cited by those analysts include the cold end to the 2012-2013 winter and EIA Form 914 data indicating declining production. Analyst price predictions for 2013 have run as high as $4.11/MMBtu in a bull-case forecast.
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