Everybody talks about stocks being higher than the 5-year average supply, but demand is above the 5-year average too. So is the market really oversupplied? Assuming a compound annual growth rate of 2-3%, demand is probably 5-6% higher than the 5-year average too. With supply about 10% higher than the 5-year average, excess inventory is probably only about 175 BCF. That can be wiped out in a couple of bad weeks like we're having now.
Using the 5-year average or mean as the comparison makes little sense to me. Every year more homes are built, new industrial demand, etc... - its just GDP growth and inflation.
Maybe a better comparison would be the 5 year average and mean, but correct for the past 3 years of GDP growth(so multiply by 6-9%). I look at YOY numbers, but I understand since NG is soo volatile that other measures may be more appropriate. I am looking for NG to be above $4 in 2013 as new demand is created from these relative low prices compared to alternatives.