Energy News Today

Natural Gas Storage: Annual ‘Surplus’ Will Continue To Shrink For Another 10 Weeks


The Weather

Last week

Last week (ending June 26), the number of cooling degree days (CDDs) jumped by 37.3% w-o-w (from 59 to 81). We estimate that total energy demand (as measured in total degree days, or TDDs) was 4.7% above last year’s level and 6.5% above the 30-year average.

This week

This week (ending July 3), the weather conditions are warming up. We estimate that the number of nationwide CDDs will rise by 11.9% w-o-w (from 81 to 90). Total average daily consumption of natural gas (in contiguous United States) should be somewhere between 74 bcf/d and 76 bcf/d. Total energy demand (measured in TDDs) should be as much as 13.0% above the norm but some 3% below last year’s level.

Next week

Next week (ending July 10), the weather conditions are expected to warm up again. The number of CDDs is currently projected to increase by 18% w-o-w (from 90 to 107). Total energy demand (measured in TDDs) should rise by a whopping 16.7% y-o-y, while the deviation from the norm will expand to as much as +26.7% (see the chart below).

Source: Bluegold Research estimates and calculations

The latest numerical weather prediction models (Wednesday’s short-range 00z runs) agree that, over the next 15 days, TDDs should remain above the norm (on average) – see the chart below.

Source: NOAA, ECMWF, Bluegold Research

There is no disagreement between the models in terms of scales: the latest GFS model (06z run) is projecting 79.4 bcf/d of potential natural gas consumption (on average over the next 15 days), while the ECMWF model (00z run) is also projecting 79.4 bcf/d over the same period. Projected TDDs are trending higher and remain above the norm (+22.7%) as well as above last year’s level (+8.5%). Indeed, there is now a minor “bullish divergence” between the number of projected TDDs and the price level (see the chart below).

Source: Bluegold Research estimates and calculations

Overall, over the next 15-day period, total natural gas demand (when adjusted for probability) is expected to average 91.3 bcf/d. Total demand has already reached a “seasonal low” (on June 14) and should trend higher for another two-three weeks – see the chart below.

Source: Bluegold Research estimates and calculations

Supply

Latest dry gas production estimate (for contiguous United States): 86.9 bcf/d.

  • -9.5 bcf/d from an all-time high;
  • +0.6 bcf/d from a 3-week low;
  • -0.2 bcf/d from Tuesday’s results.

We currently expect dry gas production in contiguous United States to average 87.08 bcf/d over the next three months (July-August-September). Annual growth rate is projected to be negative.

Source: EIA, Bluegold Research estimates and calculations

EIA has revised higher its U.S. dry gas production forecast by +0.24 bcf/d (on average). EIA currently expects dry gas production to average 86.03 bcf/d over the next 19 months. EIA still projects that U.S. dry gas production will continue to decrease until March 2021.

Source: EIA, Bluegold Research estimates and calculations

Storage Report



Read More: Natural Gas Storage: Annual ‘Surplus’ Will Continue To Shrink For Another 10 Weeks

2020-07-01 18:58:13

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy
%d bloggers like this: