winter 2010/2011 outlook for natural gas
EIA weekly statistics showed natural gas inventory in working storage reached a peak of 3.84 TCF in mid-Nov. While we recognize final EIA statistics sometimes vary from weekly statistics by as much a 100-200 BCF, weekly statistics were in close agreement with final statistics for end of Aug and Sep. While this volume was a new record high for mid-Nov, inventory levels in 2009 did not peak until the last week of Nov and also totaled 3.84 TCF.
Since 2000, withdrawals from working storage totaled a low of 1.5 TCF and a high of 2.32 TCF with a median of 2 TCF. For winter 2010/2011, based on a cumulative withdrawal of 2 TCF, inventory remaining in working storage on March 31 will total 1.5-1.8 TCF. The record high volume of natural gas remaining in storage on March 31 was 1.69 TCF (March 2006) and inventory remaining in storage was 1.66 TCF for March 2009 and March 2010. Unless winter 2010/2011 is significantly colder than last year, we expect a new record high volume on March 31 -- our most likely case is 1.75 TCF.
The plentiful supply of natural gas in storage will tend to keep natural gas prices in check in most regional markets except the northeast city gate markets. We look for natural gas prices at Henry Hub to succumb to significant bearish pressures as early as mid-Feb and we definitely expect to see falling prices before the end of March. There is some chance prices could begin to fall before the end of Jan.
Finally, bearish pressures on wellhead prices and market prices in the Houston Ship Channel, Henry Hub, NYC city gate will be more intense during Q2 2011 than during Q2 2010. For more information on our consulting services and details on the outlook for trends in natural gas markets and prices, contact Daniel Lippe, principal consultant, at 713.977.0114.
