Keith Schaefer Blog | There Is Less Than One Day's Surplus Of Natural Gas | Talkmarkets
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There Is Less Than One Day's Surplus Of Natural Gas

Date: Thursday, October 6, 2016 10:48 AM EDT

Natural gas supply and demand fundamentals have changed in a major way. In March there was way too much gas. By November there may not be enough... at least at these low prices.

NOW is the time to position yourself to profit from it BEFORE the money starts flowing into natural gas producers.

For 21 consecutive weeks, natural gas inventories have risen by less than what we would expect in a normal summer and fall. 

Every week... less and less gas for months... and once there was Big Heat in August and September... North America used a lot more natural gas than anyone thought we would.

The result of this: the enormous natural gas storage surplus is vanishing--quickly. The chart below shows how the surplus over last year is plummeting.

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Back in March, we had a huge amount of natural gas in storage. It was absolutely a glut. At the peak in March 2016, there was 1,014 billion--over 1 TRILLION--cubic feet more natural gas in storage than there was a year earlier.

Today that year-on-surplus is all the way down to a paltry 69 billion cubic feet… and it is falling fast. To put that into perspective, the US uses about 70 billion cubic feet a day right now--so there is slightly less than one day's worth of extra storage this year over last.  

Nobody would have imagined that inventories could fall this fast over the summer. It is what will come next that is going to make things really interesting.

Last year the US had a very warm winter in the densely populated east coast. This year it is expected to be MUCH colder.And each really cold winter day can add 10 billion cubic feet of demand. One day, 10 billion cubic feet.

That giant surplus of natural gas in storage is already gone. Soon the small surplus could turn into a BIG deficit. When it does the market is going to quickly reach a very simple conclusion based on two simple facts:

Fact One – Natural gas inventories are falling at an incredible rate

Fact Two - Nobody is drilling for natural gas anymore.

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