Natural Gas Inventory Report, May 19, 2023

The Energy Information Administration released their weekly report on Thursday.

Nationally, inventories are well above the 5 year average, although still well below in the Pacific region. substantial gains have taken place over the past few weeks, having increased 27% in the past two weeks.

Pricing in the Pacific region did increase, but still remains within reach of other regions... which continue to be on the low side.

EU and UK continue to fare well, regarding inventories and remain well above both last year and seasonal 5 year averages.

While pricing in Europe has fallen, it continues to be extremely high, compared to pre-covid and pre-invasion.

An example would be the U.K., where the price range is currently £1,509~£2,264. I compare that to the extreme predictions of £3,600~£5,400 from about 21 months ago, and the price cap rollout of £2,500.

The good news is the £2,500 cap will stay into June. I would think the cap could be lowered, based on current market pricing, but that is just my silly opinion. It's not like there is a large storage of higher priced natgas to work through, for th UK.

Natural Gas Inventory Report, May 12, 2023

The Energy Information Administration released their weekly report on Thursday.

As usual the above graph does not capture the whole story by region. The west coast is still lagging, but beginning to gain ground. That should continue as west coast nat/gas pricing has fallen below the Henry Hub, which is now one of the highest in the U.S., which is at lows not seen since 2020.

European and United Kingdom storage continues to gain and remain at seasonally elevated levels.

The pricing for UK and TTF nat/gas, continues above "normal".

So far... so good!!

West Coast Natural Gas Inventories improving, but still below seasonal norms.

The Energy Information Administration released their weekly report on Thursday.

Quick check of pricing...

For those interested in a few EU countries and the UK, these are the latest stats...

Clearly the UK seems to have a need for more storage, but the UK does get considerable volumes from their own gas fields, as well as having LNG infrastructure. 

Overall, the EU currently is sitting with 61.04% of capacity. This is significantly above of last year and even the 5 year average.

West Coast Natural Gas Inventories still way below normal, but showing signs of life.

The Energy Information Administration released their weekly report yesterday.

But...

Slight improvement, with West Coast still lagging year ago, and 5 year. Mountain appears out of the woods, with everyone else showing hefty inventories for time of year. 

For Europe, inventories are well above both last year (double) and near top of 5 year average.

I shall divurge for a moment. Crude oil prices are in the range of October, 2021... or pre invasion, sanctions, etc. Yet global consumption is rather steady. Part of this was reducing SPR by various countries, but I suspect that significant amounts of "sanctioned" crude is still hitting the market. Then there is OPEC+, theoretically reducing output. So... 

I suspect the countries doing the sanctioning are ignoring these stream adjustments, as it benefits these countries, while talking a hard line. Virtue signaling has come to the sanctions regime, and was likely there... from the start.

On to the natgas pricing...

First up the USA. Prices have remained rather stable at the Henry Hub for nearly 3 months, with the average about $2.15MMBtu. This is more "normal" for pre Ukraine invasion pricing. The replenishment cost of the inventory is down, so the consumers should continue to see some easing.

For Europe the current pricing is still double "normal". It seems to have settled into a narrow band in the past 6 weeks. With the inventories heavy with very high priced natgas, the outlook for consumer relief is much farther down the road. 

Can Europe and the U.K. weather another winter? 

West Coast Natural Gas Inventories still way below normal, but showing a slight rise.

The Energy Information Administration released their weekly report yesterday.

As usual, the overall indicates above seasonal 5 year average. Some areas are in much better shape than others. 

In the West, prices generally declined this week, except for the price at PG&E Citygate in Northern California, which rose 38 cents from $5.79/MMBtu last Wednesday to $6.17/MMBtu yesterday. The price at SoCal Citygate in Southern California decreased 33 cents from $7.99/MMBtu last Wednesday to $7.66/MMBtu yesterday. In the Pacific Northwest, the price at Sumas on the Canada-Washington border fell $1.17 from $4.80/MMBtu last Wednesday to $3.63/MMBtu yesterday. Southern California Gas (SoCalGas) began planned maintenance on Line 5000 on Monday, April 17, which will curtail 630 million cubic feet per day of natural gas flows through April 28.

Still about triple the price of Henry Hub.

Elsewhere...

According to news reports, the UK storage is sufficient to last through the summer. Not sure what that even means, as future's prices seem to indicate a rise. In any case, the so called cap currently in place of £2,500 is likely to show little easing, in my humble opinion.

German inventories are holding steady at 64%. It should be noted the winter was mild, plus consumption was reduced... largely by industry, according to Der Spiegel. Can that extend through another year? If productivity was not impacted... were these industries wasteful? 

West Coast Natural Gas Inventories still way below normal

The Energy Information Administration released their weekly report yesterday.

The graph indicates at the upper end of the 5 year, a deeper dive results in something like this...

Mountain and especially the West Coast is way below normal, which is also reflected in the pricing of that region, compared to others.

Although falling week over week, prices in West Coast markets remain elevated and are currently the highest in the United States. The price at SoCal Citygate in Southern California decreased 66 cents from $8.65/MMBtu last Wednesday to $7.99/MMBtu yesterday, and the price at PG&E Citygate in Northern California fell $1.52, down from $7.31/MMBtu last Wednesday to $5.79/MMBtu yesterday.

Generally speaking, about triple the rest of the nation. Some specific issues were colder than normal weather, this past winter, as well as numerous pipeline problems. 

Elsewhere...

TTF and UKG prices continue to ease down across the board. Henry Hub is still drifting lower into prices not seen in over 30 months. As a consumer, I consider that a good thing... if it gets passed on.

Haven't checked UK storage, but Germany is holding steady at 64%, which is more than double this time last year and near 50% higher than the 2016~2020 average for same period. 

It is hard to imagine a repeat of last year's gyrations and LNG shipments don't seem to be affecting Henry Hub. That is not to infer European energy costs are substantially waning. The consumer will likely continue to feel the shock for quite some time. Sorry!

Germany at 64% storage has to recoup the cost of that storage, which was really quite high... and continues to be quite high. 

 

Natural Gas Inventories look to be good, except on the left coast.

The Energy Information Administration released their weekly report Thursday.

In great shape, except for the west coast...

So prices are down in most regions, with the exception of above. With warmer weather, some improvement should occur in those regions.

However, that leaves much of the country outside the Mountain and Pacific regions at +48.1% above this time last year, and +31.6% above the 5 year seasonal average. Including the Mountain and Pacific regions, you get...

So it really should come as no surprise that Henry Hub prices are this low. At some point, the average price of inventory is reduced enough to feed into the regular economy... and slowly bring down consumer expenses, related to natural gas. It might have started in February. 

The question with the prices this low... will household energy prices reflect this in the near future? IF prices continue at this low point, then it would not be unreasonable to expect that part of the energy component in the CPI, to retrace back to spring 2021... by late summer. 

Could they go lower? That might be wishful thinking.

The same cannot be said for Europe. Futures pricing is still triple 2 years ago. Considering the hefty condition of their inventories and also considering the likely average price of those inventories... Triple may become the norm. That is without the anticipated rise going into next winter.

Not sure how all this will play out, with the price schemes, caps, subsidies, etc. and future implications of a return to the principles of the Maastricht Treaty. 

Cooking With Natural Gas March 16 2023

The Energy Information Administration released their weekly report Thursday.

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The current storage is near the high end of 5 year average, for this time of year. That is a good thing, but we should soon enter into a storage growth period.

Of course, it varies by region...

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Mountain and Pacific regions are still down, and has been reflected by their prices over the past few weeks. The good news, is those prices are falling. 

The price at Sumas on the Canada-Washington border, the main pricing point in the Pacific Northwest, fell $3.74 from $7.16/MMBtu last Wednesday to $3.42/MMBtu yesterday. 

The price at Malin, Oregon, the northern delivery point into the PG&E service territory, fell $1.48 from $7.52/MMBtu last Wednesday to $6.04/MMBtu yesterday, leading to a $1.86/MMBtu decline in the price at the PG&E Citygate in Northern California from $8.80/MMBtu last Wednesday to $6.94/MMBtu yesterday. 

So the U.S. is starting to look good. HOWEVER, storage contains natural gas that was priced at much higher rates. While most futures are substantially down, that higher priced NatGas in storage will prop up energy prices to the consumer. They should trend downward from here. How long that takes... I don't know. 

The same situation is seen in UK and EU. However prices are still elevated and will likely remain elevated. There should be some easing to the consumer, but not sure that will happen this year. 

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An example might be the UK pricing. It will likely never return to February 2021 levels, unless Russian NatGas returns to the market. Not looking likely.

The UK had an outlook of £3,600~£5,500 late last summer and settled on a cap of £2,500. Current outlook is £1,700~£2,300. The cap remains in place, as the average price in storage... exceeds that cap.

That remains the situation in much of the EU. It will take a long while to recapture the excessive inventory costs of stored Natural Gas. 

In short, the outlook for EU and UK natural gas futures are in the current range. Same for the U.S. 

As for the U.S. consumer, it is not out of the realm of possibility, that lower natural gas prices will slowly trickle through the system and maybe return to levels of 2 years ago, by end of the year... hopefully.

The EU and UK will not see a return to levels of 2 years ago. Maybe a reduction of 10% sometime by end of the year. 

In any case, I have said my piece and will take a break from writing about natural gas... and partake of something, which will give me that other natural gas.

Cooking With Natural Gas Feb 16 2023

I had briefly considered a seasonal hiatus regarding the NatGas reports, but something popped up in my in basket, telling me to hold on for at least another 6 weeks. The Groundhog didn't lie, just missed the timing!!

The Energy Information Administration released their weekly report Thursday.

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Again, drops in supplies were evident, yet still holding above year ago levels. West Coast and Mountain regions being the exceptions.

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Looking good so far.

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Prices keep slipping everywhere. Even in the UK, the price range is £1,800 ~ £2,300 (annual), compared to last summer's £3,600 ~ £5,400 (annual). 

Prices are low due to decreased demand, due to much warmer temps, etc. Prices are so low, the need for added storage is being reduced, companies are considering cutting back on drilling, etc.

Spring is in the air and everything looks great. Why am I being so sarcastic?

Climate change leads many to think solely in terms of global warming. On average, that would be correct. But climate change is all about extreme weather events. We acknowledge these events when it is due to significant flooding, droughts, hurricanes, extreme cold snaps, etc. 

However, we seem to disregard those mild temps. Much of Europe is in an extreme weather event. Law of averages will level that out, AND possibly in the near future. 

Good luck!!

Cooking With Natural Gas Feb 9 2023

The Energy Information Administration released their weekly report Thursday.

Natural Gas storage is still within 5 year range for the USA.

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There was quite a drop in this last reporting period, but still remains in good shape on the 5 year scale.

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As for pricing, the Northeast and West Coast saw significant drops in prices, as outlined in the report. Generally speaking, the prices in the USA fell back to seasonal norms of 2 years ago. 

The situation in Europe has seen prices fall dramatically, but still quite elevated... compared to 2 years ago. 

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In any event, the winter has been mostly mild and translated into less than expected drawdowns. HOWEVER, no one can forecast next winter's weather, so expect some upward movement in Natural Gas prices... come mid summer. 

Natural Gas Report, Jan. 13 2023

The Energy Information Administration released their weekly report Thursday. 

Natural Gas storage is still holding up in the USA.

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The data suggests we have "weathered" the recent cold spell.

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Looking across the pond, the German storage is currently holding at 90%. Germany has reduced Natural Gas consumption by a whopping -38% over the 2018~2021 average. As the storage across Europe has peaked and holding steady, the urgency for more Natural Gas has eased. It has also been a very warm winter. 

With that easement, the price of Natural Gas across major trading markets has also eased.

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While everything appears all rosy and nice, a lot depends on weather, and not just this winter, but preparation for next winter. 

Natural Gas Report, Dec. 24, 2022

The Energy Information Administration released their weekly report Thursday, and I am just now getting around to commenting, and given the current climate, could be old news.

Such as the latest storage being from 12-16.

This paints a picture of almost normal for everywhere, except the West Coast. It will be a couple of reports, before a clearer picture of this current winter storm's impacts. BUT, the futures market seems to be ignoring these storms. Possibly due to the short duration. It's hard to believe, but temps will rebound to normal and above normal temps... by New Year's.

The futures market has dropped from last week. And I do mean... massively dropped. Why? Supply outpacing demand, would be one explanation... but why? Until I can grasp the why, I have to believe a rapidly slowing demand is the reason. Again... why?

I am talking about storage levels and demand to refill. The answer seems kind of obvious, when considering inventory levels and demand. It is likely felt that we have enough in storage to withstand this winter's demand, which means a lowering of stocks going into summer. 

That would be the normal cycle, except... what about next winter and the build of inventory?

I guess we should enjoy this while we can. Consider it the calm, before the next storm!

Natural Gas Report, Dec. 15, 2022

The Energy Information Administration released their weekly report today...

Continues to hold inventories above mid range of 5 year maximum and minimum. Regionally... a bit different story...

Mountain and Pacific regions experienced some drops, week to week and down from one year ago. That storm hitting into the west, is now moving hard into the east, so I would expect some drops in more regions on next week's report.

Overall, prices have edged up on UKG and TTF, with U.S. futures jumping about 9.5%.

Overall, that percentage is still in a rather narrow band, as is UKG and TTF. Forward looking, does not see an let up, as EU and UK reserves will likely be quite slim, by spring. A lot of Russian natural gas was used to build up those reserves, prior to NordStream being curtailed and then shut down. 

Not sure who will fill that gap in the 2023 runup to next winter. I would expect U.S. natural gas prices to shoot up during this period, as more LNG Tankers and Processing capacity comes on line. Then there is the matter of Russian LNG, which is still getting to the market, and quite possibly more than what the U.S. is shipping. Highly likely, it is more. 

While that might infuriate some, it would ease the run up of prices in U.S. Natural Gas.

Take your pick!

Natural Gas Situation in the United States

The Energy Information Administration released their weekly report today...

Nationally, not too bad for inventories, although some areas being lighter than others. 

Prices have slipped a bit over the past couple of weeks, which is good news.

Now for a mixture of international politics and trade. Europe has been screaming from the rooftops about the new U.S. legislation that benefits U.S. based manufacturers. If there was not a war in Ukraine, would that be such a "major" issue?

Much of Europe's industrial strength was derived from cheap Russian energy imports, especially natural gas. Since the invasion, prices of natural gas has mushroomed, with new contracts being written at much higher costs to European industry. Futures indicate this will continue for a couple of more years, at a minimum.

As a result, many European companies can no longer compete with the U.S. on a cost per unit basis and have publicly stated that moving of operations is a viable alternative. This is the hollowing out of the European industrial base, that is sometimes mentioned.

The new U.S. legislation may indeed have some WTI violations and may receive some minor "tweaks", but the uproar is a smokescreen to cover for what is about to transpire. European companies, heavily dependent on natural gas, will being shifting to the U.S., or somewhere with cheaper natural gas. 

Every good politician understands the importance of blame assignment. In this case, they are diverting the public's attention to a small blip in a trade document, and hope the public continues to blame the U.S. as their industrial based is hollowed out... due to high energy prices. Let's face it... many Europeans already blame the U.S. for everything bad that happens to them.

Certain publications that serve as mouthpieces for those countries' governments, are beating that drum really hard. 

Buckle up... It will be interesting, in my humble opinion.

Quick Take on GDP Revision

 The BEA release.

Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the third quarter of 2022 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.6 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6 percent. The second estimate primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased more than previously estimated (refer to "Updates to GDP").

That is good news, except when delving into the details, although still not so bad... just not so optimistic going forward. 

              

Considering the size of PCE relative to overall GDP, the increase is more a product of overstating the advance GDP's drop in that category. Which is a good sign, if PCE is easing back into the traditional range and all the other categories begin pulling their weight.

It should be noted, however, that consumer spending has increasingly become a greater share of the GDP. How long can that continue?

 

Is There a Natural Gas Shortage In the US?

Not if today's report from EIA.GOV is any indication.

Current natural gas in underground storage, matches last year's figure. Of course, the regional differences might an issue.

While it might look good, it should be noted that storage is not sufficient to last through the winter for the East, and especially the Northeast. Pipeline constrictions limit the resupply, which results in requiring LNG. The latter is a political hot potato. Be wary of which side of any argument you might feel inclined to side with. 

Each side has an agenda and while we want to focus on the truth... sometimes the truth is not the whole truth. 

An example of how facts and truths can be spun. 

• The earth was 94.5 Million miles from the sun in July.
• The earth will be 91.4 Million miles from the sun this coming January.

Both of those statements are true and factual. Taking those two statements alone, could result in some wild claims about the earth crashing into the sun in less than 15 years, which is not true or factual. 

The point being... there is a lot more truth to be uncovered, to find the whole truth, and nothing but the truth. So be wary of some of those truths being bandied about.

Okay, on to natural gas futures...

One thing is for certain... consumer costs for heating will go up this winter. Energy inflation is still a thing, even if gasoline prices are slipping.