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Until we see substantial reductions in all three categories


November 23rd, 2013

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LDL And Natural Gas Statistics

SummarySpring is here for a big chunk of the L48 despite Mother Nature dealing a surprise colder than expected canada goose clearance March for the Midwest and Northeast.

Lots of industry data this week including the EIA Drilling Productivity report. Two week of slow and steady gains wiped out by a disappointing EIA storage uk canada goose update.

The gas focused producers had another solid week, and are holding most of the strong gains since the early Feb washout. A positive sign for this beleaguered group.

It noteworthy the recent cold weather didn spark a bigger rally. This suggests market players have already shifted focus to shoulder season production fundamentals.

Happy Weekend! A lot happened the past seven days so let’s get right to it.

The CFSv2’s and NOAA short term maps are still leaning bullish, but “average” to cool late March/early April temps are worlds different than January especially for the southern half of the L48. Without the cold Canada Goose Online intensity of early winter, the market is moving on to shoulder season dynamics. LNG Exports: Sabine Pass had a strong week averaging canada goose store 3.2 bcfd. Cove Point did not. Cove barely registered any feed gas this week, and inquiring minds want to know what’s going on? S reports the next tanker arrival is scheduled for early April. In the meantime 5.6 Bcf per week is staying in the east supply pool. It will not surprise anyone Canada Goose online if Dominion (NYSE:D) has to announce another delay. At 1% of L48 daily production, Cove is not a monster, but the psychological impact is real, and reminds the market large industrial projects don’t always go as smoothly as Sabine Pass. Bearish for natural gas due to associated production from shale basins including the Permian, SCOOP/STACK, etc. We’re heading for North American driving season and higher motor gas demand. Hard to see a lot of WTI downside unless we get a big OPEC defection. Up remains the path Canada Goose Coats On Sale of least resistance. You’d need to see sustained WTI pricing below $53 to get lower associated output. Not likely anytime soon. loonie, finished near nine month lows Friday. border markets. New England’s volatile winter market is the biggest variable demand center with minimal flows during shoulder season, but high volumes during winter demand especially when the Algonquin system is maxed out. Flows have been higher than expected the past few weeks adding to the year over year supply surplus plaguing nat Canada Goose Jackets gas prices. population, Canada will remain a supply headwind for a long time. There are substantial existing pipelines into the PNW, midcon and NY/New England markets. Expansion efforts are currently focused on the PNW for better access to canada goose coats on sale premium west coast markets.

EIA Drilling Productivity Report The March DPR was released Monday afternoon.

The above image shows the canada goose outlet vancouver DUC estimates for Feb taken from the latest report. On the canada goose surface, this looks like the standard gain of 100+ DUCs with the majority coming from the Permian and marginal differences from the other major shale basins.

The Canada Goose sale above image shows the DUC estimates for January taken from the Feb report. The DUC estimates are noisy and you can’t infer much from one report, but it’s interesting the total flatlined near 7,600. This is nothing for the bulls to get excited about given 7,601 is an all time high for EIA DUCs, but it’s better canada goose factory sale than the relentless climb higher we’ve observed since the Nov, canada goose black friday sale 2016 bottom at 5,456.

Bottom Line: There are plenty of DUCs in the Super Seven shale regions. Higher L48 dry gas production correlates strongly with higher rigs, higher DUCs, and stronger WTI pricing. Until we see substantial reductions in all three categories, it’s unlikely L48 production will drop meaningfully from all time highs. And don’t forget about all the uk canada goose outlet shiny new midstream pipes coming online this year along with the new gas canada goose clearance sale processing facilities. Oil Rigs: 800 vs. 631 y o y, +26.8%. Gas Rigs: 189 vs. 157 y o y, +20.4%.

Canadian rigs are moved before spring arrives. Most of the drilling happens in Alberta Canada Goose Parka where you need to move rigs on solid/frozen ground before the spring weather creates muddy conditions. We need 2 3 more weeks of data to draw conclusions for the canada goose uk shop 2018 2019 canadian goose jacket production period. keeps powering forward with canada goose uk outlet steady gains. I’m not sure what a miscellaneous rig drills for, most likely oil given current economics. Focusing on the Super Seven quickly reveals bearish trends for nat gas. Rigs are up year over year across buy canada goose jacket the board, and we’re already at ATH L48 production above 78.4 bcfd. Drilling growth, DUC growth, and production growth are happening where the big new midstream pipes are being built. It’s logical to conclude we’re heading for higher supply this spring/summer.

Conclusion Another rough week for natural gas and deservedly so. After a big drop Thursday following the EIA storage report, a few buyers showed up Friday afternoon, but volume was weak and it looked like short’s were cashing in for the weekend.

EIA End of Demand season cheap canada goose uk (EOD) is heading for 1,335 Bcf based on current weather forecasts. The market isn’t concerned with the 714 Bcf y o y deficit. My next article will explain why the seemingly large deficit isn’t helping the price curve.

What factors can drive a big rally?

Major extended nuclear power plant outages Lower L48 dry gas output Colder weather stretching into April, and then an immediate switch to super hot summer weather Extended delays for the key midstream projects (beyond Oct 1st, 2018) The gas curve is depressed because none of these catalysts are high probability. With Trump’s team in power, it’s highly likely we’ll have Rover Phase 1 and 2, Atlantic Sunrise, and many other incremental midstream projects ready to go by October canada goose coats 1st. All of these projects are designed to get low cost gas and NGL’s to premium markets.

Prices need to remain under $2.90 for the key summer months to guarantee power burn demand can absorb the extra dry gas supply. April and May are looking tough for the near month futures and spot markets due to historically moderate canada goose uk black friday weather. Summer weather is the next big demand catalyst and no one wants to count on Mother Nature for their investment strategy.

I don’t see a high probability trade for the commodity right now unless weather gets materially more bearish enabling another push down. Patience is the key word. buy canada goose jacket cheap Keep monitoring the producer charts for new setups. CNX Canada Goose Outlet (CNX), Cabot (COG) and Antero (AR) look the best to me, but even Range (RRC), Southwest (SWN) and Gulfport (GPOR) are showing signs of life. Hard to get super excited about the sector given the potential commodity headwinds, but the smart companies are switching gears as quickly as possible to focus on higher margin NGL’s, etc. Everyone is trying to buy time in hopes of big demand growth in 2019 from the new LNG export facilities and possibly Mexico. Cheniere (LNG) shook off early week volatility and is consolidating near its 50 DMA. A positive step as it forms a new base after recent gains.

Thank you for reading.

Disclosure: I am/we are long AAPL, LNG, FB, NFLX, GILD, SGMO, GOOG, CNX, USO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this cheap Canada Goose article.

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