TeaLeaves

Well, we won’t see a three-banger storage report this week, but we will shortly. Very shortly. And, in rapid succession. Demand is cliff-diving this week, all across the quad. There may have been some regional demand pockets last week, but don’t get too excited. Few and far between is this week’s new mantra. Meteorologists tell us to expect light to wildly light Lower 48 demand across the next couple weeks. Plus, LNG is off. Production is stout, though no records this week. Wind was higher than the previous week and likely higher than this week, too. The current storage tally is 2,063 Bcf, or 341 Bcf above the five-year average and 507 Bcf above ’22. And somehow, natty is up these past few sessions. Considering how much we normally get from Canada this time of year, and under these weather conditions, I’m hard-pressed to blame Alberta wildfires for current price strength. Maybe the recent hint of an especially hot Summer – in the back half anyway – is getting folks’ attention. Hard to tell. Oil markets are also kinda funny right now. We seem to be swimming in everything, but nobody is calling a price collapse in any of it. Hmm. We hosted an excellent STEO briefing on enelyst.com yesterday with Steve Harvey. A couple interesting takeaways: First, their current Fall EOS is pegged to a top line of 3,762 Bcf, a number that currently sits at the very bottom of our weekly EOS survey range – 3,753 to 4,425 Bcf (average 3,973 Bcf). Why so low? Good question. EIA pegs the low number to increase natural gas consumption for electricity generation by about 2% for 2023. Hmm. And, of course, low prices. EIA said that it now expects this Summer to consume the second highest volume of natural gas for power generation on record, averaging about 38 Bcf/d. Last year took the prize at 39 Bcf/d. And yet, this Summer isn’t expected to be as hot as last year, and industrial consumption is down, year on year, EIA says. Looks like we have a horse race developing for the coming season folks – we see very divergent outlooks forming up. And oil and gas prices are firmer this week, but on what news exactly? I see high-side risk to this week’s storage report. – the editor

Rhett Milne of NatGasWeather.com tells us we should expect another smaller-than-normal build for Thursday’s EIA report due to cool temperatures across the northern US last week. “However, the following several builds will be factoring in very nice conditions over the US for near- to larger-than-normal builds, with the potential for a streak of four to five that will be near or over 100 Bcf. We look to the end of May or early June for more impressive heat to show up, and it will need to, along with a decrease in production, or surpluses will remain healthy and over 325 Bcf into mid-Summer.”

The good folks at SP Global tell us that 82 Bcf should be right on the money this week. A build that size, while smaller by a few Bcf than the five-year average (87), but bigger by a few than last year’s 76-Bcf injection, would bump inventories by 336 Bcf above the five-year average and 513 Bcf above year-ago levels. SP Global says that early indications for this week, a week marked by mild weather, lower demand and high production, show a build upward of 119 Bcf is possible. 

LNG is trending lower, mostly on maintenance issues. Gelber & Associates tells us that gas flows to US LNG export plants have dropped to near 12 Bcf/d so far, continuing the decrease from the highs in April. “Just about every export terminal has reported reduced flows going into the terminals signaling that maintenance season is underway. Cameron LNG still has reduced flows, Corpus Christi LNG appears to have a train off line, and similarly Sabine Pass and Calcasieu have approximately 1 Bcf/D of reduced flows combined. Freeport is the only terminal that does not appear to be doing maintenance at the moment and remains at its highs.”