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roundup2NATURAL GAS INVENTORY (Week Ended 1/2/15)

Current: 3,089 Bcf

Actual Injection/(Withdrawal): (131) Bcf

Economist Average Estimate: (121) Bcf

Previous: 3,220 Bcf

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ANALYST COMMENTARY

KLR Group

Storage overview

  • The EIA reported a 131 Bcf storage draw, 6 Bcf above our 125 Bcf estimated draw and 12 Bcf above the 119 Bcf consensus draw.
  • The East region showed a 65 Bcf draw, the Producing region showed a 33 Bcf draw and the West region showed a 33 Bcf draw. Storage stands at 3,089 Bcf, ~10% above last year and ~2% below the five-year average. The data suggests the market is ~1.5 Bcfpd oversupplied on a weather-normalized quarterly moving average basis. Notably, gas was up ~$0.03 following the storage report.

Supply/demand trends

  • Over the past four weeks, gas-fired power demand has been trending down ~1.3 Bcfpd y/y, while industrial demand has been averaging up ~0.1 Bcfpd y/y over the past month.
  • Over the past month, Canadian net imports are down ~0.9 Bcfpd y/y, Mexican net exports are up ~0.5 Bcfpd y/y, and LNG send-out was down ~0.2 Bcfpd y/y.
  • In ’15, we anticipate gas-fired power generation should increase approximately 0.8 Bcfpd driven by a regulatory-diminution in coal-fired power generation.
  • Recent EIA U.S. supply data indicates October ’14 production averaged ~72.2 Bcfpd. We anticipate U.S. supply exits ’15 at ~73.7 Bcfpd. Rig activity is currently ~330 rigs and we expect an average of ~305 rigs in ’15.

UBS Investment Research

Storage withdrawal above expectations

Storage fell 131 Bcf, above consensus expectations of 120 Bcf and the UBSe range of a 120-130 Bcf withdrawal. However, this week’s withdrawal is still below both the 157 Bcf withdrawal in the comparable week last year and the 5-year average of a 150 Bcf withdrawal. Inventories decreased to 3,089 Bcf, widening the surplus vs. last year to 272 Bcf and narrowing the deficit vs. the 5-year average to 28 Bcf.

Weather last week was warmer than 2013 and the 5-year average

Last week’s weather was 4% and 1% warmer than the comparable week last year and the 5-year average, respectively. Since Sept, weather has been 10% and 4% warmer than last year and the 5-year average, respectively. Approximately 56% of HDDs remain ahead of us.

Forecast a 215-225 Bcf withdrawal next week

We forecast a 215-225 Bcf withdrawal next week, compared to 2013’s 287 Bcf withdrawal and the 5-year average of a 208 Bcf withdrawal. Over the last month, the weather-adjusted S/D has been 4.3 Bcfd oversupplied vs. last year and 3.3 Bcfd oversupplied vs. 5-year average. Given the current weather-adjusted oversupply, we forecast storage to exit the winter at 1.9 Tcf (above the 5-year average of 1.65 Tcf).


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.



Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.