Yesterday we saw another very good natural gas storage report. For the 14th straight week the build up of natural gas in storage exceeded the 5-year average.
The poll of the analysts by the Wall Street Journal anticipated a build up of 92 bcf for the week, and the actual build came in a little lower at 88 bcf. The good part of the report was this is 42 bcf greater than the five year average for the corresponding week.
After the very cold winter the nation faced this past year natural gas in storage had dropped to an 11-year low. I had mentioned several times we would need natural gas storage build up to exceed the 5-year average by 25 – 35 bcf each week to get back to comfortable levels again in case we face another frigid winter coming up starting in November.
The storage numbers look better each week. We are now only 530 bcf under last year’s corresponding number and 641 bcf under the five-year average. Fracking technology has helped the US develop record natural gas production this year, and cooler than normal temperatures this summer throughout the nation have reduced the use of air conditioners therefore saving on electricity and gas usage.
During the last few years $3.80 has been a significant price point for natural gas. It is also directly in the middle of the current trading range I feel will remain prevalent through the summer of $3.60 – $4. Natural gas pricing closed today (Friday August 1st) at $3.798. Today’s prices are now the lowest since last November and a good time to lock in low electricity rates.