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Wednesday, July 6, 2016

Natural Gas Shortage This Winter? -- July 6, 2016

Bloomberg is reporting:
A blistering start to summer is helping put U.S. natural gas futures on course for the biggest gain in eight years.
Gas has surged 17 percent this year, rebounding from a 17-year low. Drillers, burned by earlier declines, are refilling storage at half last year’s pace as extreme heat boosts the use of air conditioners, increasing gas demand from power plants.
By November, supplies will probably drop below the five-year average, the benchmark for normal levels, for the first time in 13 months, based on storage rates.
Just four months ago, gas plunged after the warmest winter on record left the market with a glut large enough to last through the year. Instead, hot weather and a slowdown in shale production are eating into the surplus, signaling an era of higher prices as gas exports rise and electricity generation cuts into excess supply.
“We’re moving toward a potentially serious deficit in the supply-demand balance for this coming winter,” said one analyst.
Gas inventories were 25 percent above the five-year average in late June, down from 54 percent in April. An extended slide in production would erase the surplus by the end of the year, leaving stockpiles at a deficit to normal levels for the first time since May 2015 and pushing prices to $3 this month.

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