Natural Gas Report – Surprisingly Bullish

March 14, 2019

Below is a recap of the recent EIA report for natural gas. Josef Schachter, President of the Schachter Energy breaks down the EIA report and what it means for the market. I typically only post some of these reports but Josef reached out to me and specifically said this was an important one.

Here’s his breakdown…

We had a whopper of a draw today and this is one of the largest we have seen near the end of winter ever.

  • This week saw a draw of 204Bcf compared to the five year average draw of 110Bcf and of 93Bcf last year.
  • Storage is now at 1.186Tcf down 32.4% from the five year average of 1.755Tcf and last years 1.545 Tcf or down 23.2%.
  • The biggest draw was in the South Central area which saw a draw of 88Bcf. This is what we wanted to see. If cold weather gets down to Texas it means a lot of consumption as insulation is not used widely.
  • With 3-6 weeks left in drawdowns it is now likely that we may close the withdrawal season below 1Tcf.
  • Last year in this week we saw a draw of 86Bcf and the five year average draw for this week is 67Bcf.
  • I expect a higher draw than last year when the data comes out next Thursday.

Natural gas prices have stayed at around the US$2.80/mcf area and AECO has backed off to $2.70/mcf. The hedge and commodity funds remain long oil an short natural gas futures. We need the general stock market to weaken and then margin calls across asset classes should drive oil prices downward and natural gas prices upward as they did in Q4/18.

Click here to visit the Schachter Energy Report website for more of Josef’s comments.