Arbitrage

Traders longing for the days of wide natural gas basis spreads can look to natural gas liquids (NGL) and crude oil to get their arbitrage fix, according to Bentek Energy LLC.

Traders longing for the days of wide natural gas basis spreads can look to natural gas liquids (NGL) and crude oil to get their arbitrage fix, according to Bentek Energy LLC.

With the winter gas futures months holding attractive premiums for storage arbitrage, many forecasters are expecting the current 36 Bcf deficit compared to last year’s storage levels to be washed away today with the American Gas Association’s latest weekly report. Market soothsayers are calling for another 100+ Bcf weekly injection, which would make an unprecedented five in a row.

Noting the mild temperatures across the country, favorable arbitrage spreads and “ambitious distributor refills,” the industry continues to “inject a significant amount of natural gas into storage,” said UBS Warburg analyst Ronald Barone last week in his weekly research note. Even though national supplies now stand at 958 Bcf versus 1,117 Bcf a year ago, Barone said he expects to see the storage deficit drop and perhaps post a surplus by this summer.

Noting the mild temperatures across the country, favorable arbitrage spreads and “ambitious distributor refills,” the industry continues to “inject a significant amount of natural gas into storage,” said UBS Warburg analyst Ronald Barone last week in his weekly research note. Even though national supplies now stand at 958 Bcf versus 1,117 Bcf a year ago, Barone said he expects to see the storage deficit drop and perhaps post a surplus by this summer.