Into The Vortex – EIA Reports a Draw of -179 Bcf in Natural Gas Storage with Freezing Temperatures

U.S. domestic natural gas demand continues to flutter with volatile weather.  Freezing temperatures in the Central U.S. and below-normal temperatures on the East Coast has boosted demand to highest since 2019.  EIA reported a lower than expected draw of -179 Bcf of working gas in storage lower than expected. With the global energy crisis LNG exports continue to grow but we balance supply shortages with deliverability.

Into The Vortex Contents

Click on the links below to navigate to the relevant section.

  1. EIA Natural Gas Storage Forecast and Analysis
  2. Natural Gas Quick Summary
  3. Rig Watch
  4. Weather
  5. LNG and Export Watch
  6. Natural Gas Import Watch
  7. Natural Gas Demand Watch
  8. Nuke Watch
  9. Natural Gas Futures Technical Analysis
  10. Option Volatility and Gamma
  11. DCOT Report

EIA Weekly Storage Report

  • Report Date: 1/6/2022 Via TradersCommunity.com
  • Release Time: Thursday 1/13/2022 10:30 a.m. ET
  • Market Expectations
  • Actual – 179 Bcf Prior -31 Bcf
  • Consensus Forecast -186 Bcf
  • Cons. Range: -170 to -195 Bcf
  • Last Year: -153Bcf
  • 5 Year Average:  144Bcf
  • Reuters consensus for end of season 1,640 Bcf.
US Natural Gas Storage Stage

Summary

Working gas in storage was 3,016 Bcf as of Friday, January 7, 2022, according to EIA estimates. This represents a net decrease of 179 Bcf from the previous week. Stocks were 199 Bcf less than last year at this time and 72 Bcf above the five-year average of 2,944 Bcf. At 3,016 Bcf, total working gas is within the five-year historical range.

Last Week’s Report -55 Bcf #TCNG

Broken down by region

  • South Central region -55 Bcf decrease -37 Bcf in nonsalt facilities and -17 Bcf in salts
  • Midwest -58 Bcf decrease
  • East -37 Bcf decrease
  • Mountain -13 Bcf decrease
  • Pacific -15 Bcf dncrease

Current Storage Level vs. Last Year; 5-Yr

  • Current Storage Level: 3,016 Bcf
  • Storage 2020/Same Week:  3,215 Bcf
  • 5Yr Avg/Same Week: 2,944 Bcf
EIA Storage Report
us natgasl locations

via Brynne Kelly @BrynneKKelly


Global Natural Gas Quick Overview


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Via Ole S Hansen @Ole_S_Hansen

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Natural Gas Market Price Influence Factors

Bearish Factors Include

  • Economic damage and reduced natural gas demand caused by the Covid pandemic,
  • Warm U.S. winter that resulted in weak demand for natural gas for heating.
  • Over long spec positions

Bullish Factors Include

  • Record foreign demand for U.S. nat-gas as flows to U.S LNG export terminals on April 18 rose to a record 11.921 bcf (data from 2014) and after U.S. LNG exporters loaded a record 81 cargoes in November, breaking the previous record of 75 set January of 2020,
  • Expectations that the low level of oil prices will reduce shale drilling and natural gas extraction as a by-product
  • Tighter U.S. nat-gas supplies that are down -14.8% y/y and -2.6% below their 5-year average.
  • High power burns
  • Perception that gas supply and demand are more inelastic than ever before.
  • Over short spec positions

Rig Watch 

Baker Hughes active rigs total in the U.S. onshore and Gulf of Mexico (GOM)

  • US Baker Hughes Rig Count 07-Jan: 588 (est 589; prev 586)
  • Rotary Gas Rigs: 107 (est 107; prev 106)
  • Rotary Oil Rigs: 481 (est 484; prev 480)

US Oil Rigs w/w changes by key shale basins

  • Permian -1 to 292
  • Eagle Ford unchanged at 38
  • Williston unchanged at 27
  • Cana Woodford -2 to 26
  • DJ Niobrara -1 to 12

“Rig activity…would need to increase by about 36 weekly through year-end to reach a sustainable plateau to hold current oil volumes in 2022.” –Mizuho via Reuters 12/17/21

Comments by executives of multi-basin super independent EOG Resources Inc. mirrored those for many Lower 48 management teams.

“We’re not going to grow until the market clearly needs the barrels,” EOG President Ezra Yacob told analysts during a call Thursday. “We’re committed to staying disciplined. Currently, we want to see demand return to pre-Covid levels.”


Talking About The Weather

Gulf of Mexico

Gulf of Mexico Live Weather Report

European Energy Crisis

The energy crisis pounding the world with unheard of prices was impacting the domestic pricing. In Europe we are seeing up near record highs again. U.S. fundamentals only have the domestic gas market in bear territory with mild weather and low demand.

Back to the panic levels of October.

  • Dutch TTF natural gas closes at €105.77 per MWh (**3rd highest ever settlement**).
  • UK NBP closes at 268.80p per therm (3rd highest too).
  • European gas inventories have fallen to a level typical of mid-January
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In the EU markets the energy crisis is deepening with prices soaring with an unplanned outage cutting supplies from the giant Troll field in Norway. Coming on top of geopolitical worries, freezing cold weather and dwindling stocks. Emissions trades up to compensate for higher coal demand

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La Nina

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 “A weather-roiling La Nina appears to have emerged across the equatorial Pacific, setting the stage for worsening droughts in California and South America, frigid winters in parts of the U.S. and Japan and greater risks for the world’s already strained energy and food supplies. The phenomenon—which begins when the atmosphere reacts to a cooler patch of water over the Pacific Ocean—will likely last through at least February, the U.S. Climate Prediction Center said Thursday. There is a 57% chance it be a moderate event, like the one that started last year, the center said. While scientists may need months to confirm whether La Nina has definitely returned, all the signs are indicating it’s here.” October 14 – Bloomberg (Brian K. Sullivan)

Paths of Recent Gulf Hurricanes

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Technical Analysis via KnovaWave 

Henry Hub Natural Gas Futures Weekly Chart Outlook via @KnovaWave

Daily: US Natural Gas completed 3 waves correcting the daily 8/8 spit after a classic euphoria wave 5. However, it was rejected hard at the Kijun and cloud top at 6/8. Meaning that 3 was either an a of a C or a iii – impulse in a nutshell. The adjunct failure of the 50dma and Tenkan opened up the retest of 3.80-3.60.

Notice the fractals of the move after completing the C of 4 bullish scenario played out the consolidation phase since it completed its IV (Bull Case) last year since then a series of 3 waves. For the bulls all this needs to hold for the highs to be a (iii) looking at possibilities we have the 161.8% at 7.026 if we get ‘silly’ 50dma support.

Like the larger wave on the way up it accelerated through previous highs (flat topped triangle energy) and over the resistance at 8/8 and new highs. We successfully tested that break in a pennant ABC. Previous highs (flat topped triangle energy) and 8/8 and new highs underscore the structure that fed the move and is key longer term. 

Weekly:  The classic double top playing out after a spit of the weekly Kijun was sent back off Tenkan only to reverse all the way to and through the 50wma. Natural gas continued to retrace with impulse after reaching its major target, the double top potential from 2014 which equated nicely to over 8/8 Weekly and showed true impulse off that to rebalance Chikou. It’s now a question of degree, 3 or 5? Impulse just shy of the 8/8 and Tenkan confluence. A question of continuation with the 50wma as resistance and cloud as support.

Natural gas futures Weekly
NG W 10 8 2021 2014 2021 double top

  Natural Gas Production

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Natural Gas Exports Watch

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LNG

Natural Gas feed to LNG facilities Sabine Pass, Cameron, Elba Island, Cove Point & Corpus Christi

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US Gulk Coast LNG Netbacks
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  ++Charts via RonH @RonH999 – Visit Ron for daily updates 

U.S. liquefied natural gas exports were at record high levels in the first half of 2021

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Natural Gas Mexican Exports Watch

via RonH Energy

US natural gas exports to Mexico established a new monthly record in June 2021

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Mexico pipeline exports

 

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Natural Gas Canada Import Watch

Source via RonH Energy

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Canadian imports

Natural Gas Demand Watch

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via RonH Data ‏@ronh999

Natural Gas Nuclear Power Watch

Source: via RonH Data ‏@ronh999

ALERT Three Mile Island nuclear shut down permanently on Friday afternoon 9/292019.

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Natural Gas Options Structure – Volatility (COT)

NYMEX ON NATURAL GAS OPTIONS CommodityVol.com @CommodityImpVol

NYMEX ON = NATURAL GAS OPTIONS (Live Link)

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Natural Gas Futures Commitment of Traders

 Disaggregated Commitment of Traders (DCOT) via RonH Data ‏@ronh999 @ole_s_hansen

Latest ICE and CFTC Open Interest Data: 

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Natural Gas DCOT futures only managed money traders WoW change

(Note at NG peak Highest Longs Ever 87% (since 2006) Lowest Longs 2020 24%)

  • For week ending Jan 04
  • Natural Gas DCOT futures only managed money traders WoW change
  • +4,026 longs
  • +2,756 shorts
  • +1,270 net change
  • 47.4% net long
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Understanding DCOT Reports 

Read Understanding Commitments of Traders Reports – COT, TFF and DCOT to help understand the disaggregated reports (DCOT) and how they break down the reportable open interest positions into four classifications:

1. Producer/Merchant/Processor/User 2. Swap Dealers 3. Managed Money 4. Other Reportables 

Sources: TradersCommunity, EIA, RonH Energy, The Fundamental Edge, KnovaWave

From The TradersCommunity US Research Desk