To even start refilling the record low NG Storage Levels, don't we to finish drawing on supply and start adding surplus? So why would anyone add DGAZ here? This will be a UGAZ week.
Sentiment: Strong Sell
Working gas in storage was 1,348 Bcf as of Friday, February 21, 2014, according to EIA estimates. This represents a net decline of 95 Bcf from the previous week. Stocks were 905 Bcf less than last year at this time and 711 Bcf below the 5-year average of 2,059 Bcf. In the East Region, stocks were 361 Bcf below the 5-year average following net withdrawals of 78 Bcf. Stocks in the Producing Region were 251 Bcf below the 5-year average of 775 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 99 Bcf below the 5-year average after a net drawdown of 12 Bcf. At 1,348 Bcf, total working gas is below the 5-year historical range.
Working gas in storage was 1,443 Bcf as of Friday, February 14, 2014, according to EIA estimates. This represents a net decline of 250 Bcf from the previous week. Stocks were 975 Bcf less than last year at this time and 741 Bcf below the 5-year average of 2,184 Bcf. In the East Region, stocks were 364 Bcf below the 5-year average following net withdrawals of 129 Bcf. Stocks in the Producing Region were 277 Bcf below the 5-year average of 806 Bcf after a net withdrawal of 91 Bcf. Stocks in the West Region were 100 Bcf below the 5-year average after a net drawdown of 30 Bcf. At 1,443 Bcf, total working gas is below the 5-year historical range.
I just don't see Natural Gas Futures falling to much below $4.50 or staying there for long. Just look at the NG Futures chain. Additionally, Goldman forecasts $4.50 NG this spring.
New Drilling Fracking Technology increased Natural Gas supply. Large supply means low NG prices to clear inventories. However there a issue with long term storage of NG, its not like oil. Shortages in NG due to high demand in winter drive the price up quickly.
Forger the 1&2 year chart, the 5 year chart powered by Fracking has made Shorting NG as always made them money and old habits die hard. However, NG Storage is now 17% below the 5 year average thanks to the Polar Vortex. Weather Forecasts have that same cold snap moving back in this week. Next Thursdays Inventory/Use report will mirror last weeks. Supply & Demand drives the HH spot price which impacts Futures Contracts, which drives UNG, UGAZ, and DGAZ. For the next week, I am Long NG.
Current Storage Inventories are 17% below the 5 year average and next Thursdays use/storage report will be basically will be a repeat of the last. If you get a ridicules one day run-up in UNG/UGAZ like last Wednesday take the money and run. Until winter is over and we start a sustained down trend, I am staying away from DGAZ.
NG Storage was at the 5 year low last Thursday. A new record Storage Low could trigger a Short Squeeze and traders decreased their exposure to that risk. I expect to see some additional Short Covering in the Pre-Market Trading. When the report is released, the price will move dramatically in one of those directions up/down by 20% or more. Watch the fun.
Yes furnaces will be running, its still winter. However the wild surge/drop in HH NG spot prices are based both on speculation (temperature forecast) and realities (storage report). The Thursday NG Inventory Storage Report may be a record 10 year low. Supply & Demand market basics should overpower temperature speculation. Last Thursday Supply was at the 5 year low, that is a fact!
Weather Forecast predicts the jet-stream will move up north allowing much of the nation to move into the thirties and forties. However the next two EIA weekly reports will show record low storage levels.
Working natural gas in storage decreased to 2,423 Bcf as of Friday, January 17, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net storage withdrawal of 107 Bcf for the week resulted in storage levels 19.8% below year-ago levels and 13.2% below the 5-year average.
The natural gas rotary rig count totaled 365 as of January 17, an increase of 8 from the previous week and down 64 from the same week last year, according to data released by Baker Hughes Inc. The oil rig count rose by 15 to 1,408 active units, up 92 from one year ago. The total rig count is 1,777, up 23 rigs from the previous week and up 28 from a year ago.
VT, use whatever logic you like, facts are facts. Its cold. its going to get a lot colder. The Weekly draw will be big, the storage levels are already at the 5 year lows. Sleep Well ;-)
Nice Sentiment King. Lets see if you have the guts to hold a Short position going into Thursdays storage report.