We'll go into winter with natural gas supplies at a 15 year low (EIA says 13) but because of the coming El Nino winter, we will not experience widespread shortages or a price spike...(supplies in the Midwest are 13.2% below normal, while supplies in the East are now only 9.1% below normal for this time of year...)
However, because El Nino flips the continental US weather (warm in the north, cold in the South) we may see spot shortages in the South Central region, where their natural gas storage deficit decreased to 25.0% below their five-year average..October 15, 2018: for investors, this seems to be another open-book test.
October 15, 2018: oh-oh. Maybe the Natural Gas Supply Association spoke too soon. From SeekingAlpha --
Bullish weather forecasts again led to a sharp rally in core winter natural gas contracts to start the week, boosting November natural gas prices by more than $0.08 to $3.242/MMBtu, and spot gas jumped $0.17 to $3.135/MMBtu as early-season cold drove up demand across much of the U.S.
With unseasonably low temperatures expected to persist through the end of October, NatGasWeather expects the coming weather pattern to further raise storage inventory deficits vs. the five-year average to more than 650 Bcf and likely toward 700 Bcf.
In the SeekingAlpha note above, the writer suggests the deficit could trend toward 700 Bcf. In the graphic from last week, "stocks were 627 Bcf less than last year at this time and 607 Bcf below the five-year average.The background state will remain bullish for quite some time until record production finally shows signs of improving deficits, “something that’s not expected to happen until after October due to the coming colder-than-normal pattern," the forecaster says.
My 30-second elevator speech:
- natural gas will be the talk of the town in New England as prices rise from $3-nat gas to $6-nat gas
- natural gas will be the talk of the town but there will be no crises, no emergencies; the drillers; and natural gas suppliers will be able to respond -- after all, this is Trump's America;
- Pocahontas will have all the answers; and,
- President Trump owes her $1 million
If this turns out to be accurate, there is no reason for someone like me to track the natural gas fill rate any more. If we get through a "cold" winter with no problems this winter, I will no longer follow the natural gas fill rate.
From twitter:
From Platts:
The Natural Gas Supply Association anticipates lower storage levels will be countered by soaring production this winter, resulting in neutral pressure on wholesale natural gas prices, despite record domestic consumption this winter.
The outlook anticipates a record demand of 102.7 Bcf/d, mostly tied to an increase in electric sector and industrial use of gas, as well as exports, combining to add 3.4 Bcf/d, on average, to consumption.
On the supply side, lower storage inventories at the start of the winter -- 3.3 Tcf versus about 3.8 Tcf last winter -- were seen as exerting upward pressure on prices this winter compared with last. In contrast, offering downward pressure, production this winter was forecast to average 84.9 Bcf/d, up from 77.4 Bcf/d last winter.Much more at the link.
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A Riddle
How does one make a perfect right angle without a compass? All you have to work with is the concept of lines.
Howard Bloom explains how the Sumerians, four thousand years ago, made perfect right angles which were absolutely crucial in building their ziggurats.
From wiki:
Ziggurat: (in ancient Mesopotamia) a rectangular stepped tower, sometimes surmounted by a temple. Ziggurats are first attested in the late 3rd millennium BC and probably inspired the biblical story of the Tower of Babel (Gen. 11:1–9).The angles had to be perfect if the tall towers were not to topple over.
From Howard Bloom's The God Problem, page 105:
If the angle at which your walls meet is off by even a bit, you will build an unstable structure, a crooked tower. But you don't have the concept of an angle. Any kind of angle. And you don't have a word for a "right angle." What's more, you are fourteen hundred years away from the notion of ninety degrees. So how do you make sure that you've got your corner angle, your right angle right? You do it with scratch marks in clay. You do it with numbers. Naked numbers. And with the strange patterns that numbers summon forth.
The Sumerians laid their bricks -- each nineteen modern inches long -- forming perfect right angles for their ziggurats. No compass. How did they do it?
The answer is very, very clever. I can't wait to tell our oldest granddaughter who is taking geometry this year how it was done. Again, no concept of "angles" and certainly no concept of "degrees," and yet the Sumerians knew how to make what we would call ninety-degree angles.
My hunch: every blue-collar carpenter out there knows the answer.
