zman’s Energy Brain

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Friday – 46 Bcf? Now That’s Pathetic

Posted by zmann on December 29, 2006

For the week ended December 22, 2006:

Expectations: 60 Bcf

Reality: 46 Bcf

That leaves us with 3,121 Bcf in storage (a new record high for this time of year):

  • 458 Bcf (18%!) above year ago levels.
  • 355 Bcf (13%) above the five year average.

The reporting period had 156 heating degree days in it but as Gunga adeptly pointed out in comments yesterday those degree days were in the wrong place to increase gas heating demand. The producing region actually witnessed a small build (pretty damn late in the season for that!)

Next week’s estimate for heating degree days rises a bit to 168 and they are a little more evenly spread out. From that, say we get a draw of 100 Bcf for the final week of 2006.

That leaves us with year end storage of over 3 Tcf. – also a record and not good for gas prices.

5 yr average trough storage (end of Marc): 1,216 Bcf. The five year average would have been 1025 without the inclusion of this year which was 1,695.

Coldest Jan-Mar period saw gas withdrawals of  1,635 Bcf (2002). This would yield trough storage of 1,386 Bcf.
Warmest Jan-Mar period had withdrawals of  873 Bcf (2000). This would yield trough storage of 2,148 Bcf. The current record high for trough storage is 1695 set in 2006.

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10 Responses to “Friday – 46 Bcf? Now That’s Pathetic”

  1. zmann said

    XNG starting to break down a bit.

    http://tinyurl.com/y9m9cf

    This index is composed of 15 of your favorite large and mid cap for the most part gassy E&P names.

  2. Attacking Mid said

    Do you think there will be increased selling pressure next week in energy stocks as investors choose to avoid selling in December in order to defer capital gains into 2007? If I was a large holder of XOM, CVX, etc., I’d certainly be looking to lighten up my allocation.

    I would have liked to have lightened my put position today, as we’re facing a 4-day holiday now. I did manage to dump my MUR puts at a very slight profit, but am still overweighted on SU. For diversification, I’m holding some XOM puts – I should have known better, as XOM is a really tough short. Will probably have to eat a loss on that one.

    How can gas go up on an inventory report like that?

    AM.

  3. gungagalonga said

    NG is likely just up on short covering and end of year profit booking/portfolio adjustments.

    I expect it ends the day in the red. No one in their right mind would hold long NG positions over the long weekend with the mild weather forcasts. If weather doesn’t change, it’s going to bleed red when it opens next week…

    However, if it was that easy to predict, we would all be trading from our 150′ Browards while floating around the Virgin Islands…

  4. zmann said

    AM-

    I’d suspect direction is more dependent on the weather and the next set of inventory data.

    For the last 2 years, energy has been up big in the first week despite having had a good performance in the prior year.

    Although I hate to say it, “this time could be and definitely should be different”. Commodity prices are likely to fall early in the new year…something the stocks haven’t faced in quite some time.

    Gas was overdue for a small rebound although I think the case is pretty terrible for gas if no massive storms on east coast and deep south cold materialize by mid January. I think this is a, “ok, we knew it was going to be bad and it was a little worse than expected so what’s next?” kind of day.

    Is CNBC trumpeting the fact that this was a much smaller than expected draw or are they too busy clinking champagne glasses still? That’s all it was this morning so I quit watching.

    The four day holiday stinks for TVM and I’m considering lightening up before the close to reenter same/similar positions on Wednesday.

  5. zmann said

    Gunga,

    Mine is in the shop…can I borrow yours? I’m sure that would push towards a more sunny, bullish outlook.

  6. zmann said

    CNN reporting tomorrow is:

    “long drop with a sudden stop” day for Saddam

    Could be some shenanigans relating to the oil markets between now and when the stock market opens on Wednesday. Could be giving crude a bit of support today.

  7. zmann said

    Nigeria’s population has nearly doubled to an estimated 140 million people since the last count in 1991, according to census figures released Friday. That is some serious growth.

    So as Africa’s most populace nation it stands to reason that some of these new folks are unemployed. I propose that the government hire them as additional security guards for foreign oil platforms and other oil production and infrastructure. Or as bounty hunters paid on the basis of each rebel brought in (although this may prove difficult to manage as rebel loyalty is not what it used to be).

    If they could just bring back the 800,000 bopd that are offline at present they wouldn’t have to worry about the impact of oil falling another $10/ barrel and they’d have fewer people walking around, bumping into each other or worse yet, taking foreign hostages for a living. Even better, less Nigerian citizens would be involved in internet scams, something I’d send a buck or two overseas to promote.

    Plus, if a portion of the proceeds my generates were actually directed to the villages in the form of hospitals, clean water, and schools, well, maybe you could get some long term change going.

    BTU breaking down nicely. It’s been a nice indicator for the future direction of natural gas.

  8. zmann said

    Coal futures continue to look downright horrible.

    BTU, ACI, EEE all hurt by this

    http://tinyurl.com/y45lbq

  9. zmann said

    CFTC reports natural gas long position continues to collapse. It fell another 8% this week.

    While shorts fell by just under 3000 contracts,

    the net long position declined to -9,000 contracts, it’s lowest level since May.

  10. Attacking Mid said

    I increased my UPL puts, but dumped my SU, MUR, and XOM puts.

    Who knows what oil will do by next week, but gas has little chance to go up sharply it would seem.

    Everyone have a safe and happy New Year!

    AM.

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