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roundup2NATURAL GAS INVENTORY (Week Ended 11/28/14)

Current: 3,410 Bcf

Actual Injection/(Withdrawal): (22) Bcf

Economist Average Estimate: (40) Bcf

Previous: 3,432 Bcf

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**All notes from 12/4/14**

BMO Capital Markets

Natural Gas Withdrawal Below Expectations
The U.S. Energy Information Administration (EIA) reported a withdrawal of 22 Bcf, below forecasts of a 41 Bcf withdrawal and below the five-year average of 66 Bcf and last year’s withdrawal of 162 Bcf. U.S. working gas in storage is now at 3,410 Bcf, 9.8% below the five-year average of 3,782 Bcf and 6.2% below last year’s level of 3,637 Bcf. Weather forecasts for the U.S. over the next six to 10 days call for above-average temperatures throughout the majority of the lower 48.

Our View:

  • We believe the withdrawal report will be viewed as negative given that it was lower than expectations.
  • The natural gas market is clearly comfortable with current storage levels for the upcoming winter heating season given the continued growth in the Marcellus and associated gas production. We believe natural gas prices are likely to drift until winter weather arrives.

KLR Group

Supply/demand trends

  • Over the past four weeks, gas-fired power demand has been trending down ~0.7 Bcfpd y/y, while industrial demand has been averaging up ~1 Bcfpd y/y over the past month.
  • Over the past month, Canadian net imports are up ~0.3 Bcfpd y/y, Mexican net exports are up ~0.2 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 0.5 Bcfpd driven by a regulatory diminution in coal-fired power generation.
  • Recent EIA U.S. supply data indicates September production averaged ~71.8 Bcfpd. We anticipate U.S. supply exits ’14 at ~72.8 Bcfpd. Rig activity is currently ~345 rigs and we expect an average of ~330 rigs in ’14.

 UBS Investment Research

Storage withdrawal well below expectations

Storage fell 22 Bcf, below consensus expectations of 39 Bcf and the UBSe range of a 30-40 Bcf withdrawal. This week’s withdrawal is well below the 162 Bcf withdrawal in the comparable week last year and the 5-year average of a 55 Bcf withdrawal. Inventories are now 3,410 Bcf, narrowing the deficit to the prior year and the 5-year average to 204 Bcf and 368 Bcf, respectively.

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

Last week’s weather was 22% warmer than the comparable week last year but 2% colder than the 5-year average. Since September, weather has been 1% warmer than last year but 5% cooler than the 5-year average. Approximately 80% of HDDs remain ahead of us.

Forecast a 30-40 Bcf withdrawal next week

We forecast a 30-40 Bcf withdrawal next week, compared to 2013’s 81 Bcf withdrawal and the 5-year average of a 67 Bcf withdrawal. Over the last month, the weather-adjusted S/D has been 1.9 Bcfd oversupplied vs. last year and 1.7 Bcfd oversupplied vs. 5-year average. Given the current weather-adjusted oversupply, we forecast storage to exit the winter at 1.8 Tcf (above the 5-year average of 1.71 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.