glad to see plenty are still short nat gas. In three more weeks the surplus vs the 5yr ave can be gone
look at the canadian weather model. it has the next ten days along the entire border with canada as 2 or 3 standard deviations below the seasonal average. Last week was colder than normal and a withdrawal of 78 this week would bring the surplus compared to 5 five year down to 148 BCF. Then with two more cold weeks on tap the surplus could end up at +23 versus the 5 year average
that would equate to a surplus of 900 BCF that disappeared in less than one year
don't think you are seeing the low three's again for a while. The cap ex on nat gas is down big - it will be interesting to to see how the storage builds on lower production.
I think that it takes pretty long time for nat gas drillers to get the budgets raised and rigs back in the dry gas areas. I expect that production is falling but late winter demand will also go away. I think $4 is a good price for the summer. If the relative surplus versus the five year average drops during the summer then prices can go higher. For all of the shorts that think coal plants are going to switch back I would tell them that tired argument doesn't have that much farther to go. There are plenty of nat gas plants coming on line and they are much much more efficient than 50+ year old coal plants. Those dinosaurs are going away not from just a fuel cost perspective - but from an efficiency (energy produced) and a total cost perspective.
I would rather nat gas levels at $4 because it would allow for a nice increase in the share price of the drillers but would also lead to another year of low cap ex spending on drilling. Longer term I think $5 average gas in the year 1-3 years because when it hits $5 then the nat gas drilling will pop back up. While nat gas has 25% more increase in the next year or so I would guess many of the low cost nat gas drillers that just hit multi-year lows would double or triple (except for those with big debt or complicated debt or other issues like CHK and SD)
I agree on the part that storage level will be very bullish. Where do you see the gas being consumped through April to June? Last year, the coal to NG switching on power sector was prodominent factor to push the price from $1.90. While I agree on the colder weather driven withdrawals. I don't see being too optimistic on the consumption during injection season. What is worst is RIGS opening up slowly or not increase the possiblity to produce more while consumption picture is getting reduced.