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Natural Gas Storage Forecast: Neutral Outlook, But EOS Storage Index Is Below Market Expectations

May 8, 2019  

TRADING VIEW

We have slightly reduced our long exposure earlier today, but we remain net-long (in June and July contracts) and we will continue to buy the dips at lower prices. However, we do not expect to see any strong bearish or bullish trends this injection season. We continue to emancipate a sideways market. Below is the list of executed trades.

THE WEATHER

Last week, the number of heating degree-days (HDDs) surged 40%, as weather conditions cooled down across the country. Heating demand was up as much as 73.0% y-o-y. We estimate that total energy demand (as measured in total degree-days – TDDs) was approximately 37.0% above last year’s level.

This week, the weather conditions have warmed up substantially across Lower-48 states. A drop in heating demand was especially pronounced in the Northeast and Central parts of the country. We estimate that the number of nationwide HDDs will plunge by 37.0% w-o-w in the week ending May 10, while the number of nationwide cooling degree-days (CDDs) should edge up by only around 2.0% w-o-w. We estimate that total average daily demand for natural gas for the week ending May 10 should be somewhere between 79 and 80 bcf/d, which is 15.0% above 5-year average for this time of the year. Equally, total energy demand (measured in TDDs) should be some 15.0% above last year’s level.

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