The Commodity Natural Gas Bulls Need Most: Patience
The weather in the U.S. couldn’t be any hotter, especially in the South-Central region. Air conditioners are being cranked to the hilt day and night. Yet, natural gas prices aren’t going north but south because supplies are, somehow, adequate to keep up with the maddening heat and power burns.
But that could change in due course, we hear, to the benefit of the longs. Thus, the only real commodity gas bulls probably need now is that thing called patience.
Veteran market analyst Eli Rubin, in an articulation of the aforementioned point, points to undergone caverns in naturally-occurring salt domes in the U.S. South-Centre where gas is stored. According to him, last week’s draw of 11 billion cubic feet, or bcf, from south-central salts caverns despite tame physical market pricing “may implicitly point to a key clue restraining natural gas spot prices.”
He added that fast-cycling salt storage caverns could inject and withdraw natural gas multiple times per year.
As such, with operators eyeing huge seasonal spreads this fall, October gas on the New York Mercantile Exchange’s Henry Hub was trading more than 40 cents below November, over 80 cents below December and more than $1 under January 2024, “liquidation of storage inventories into particularly strong power sector demand has kept the market well supplied and physical pricing low.”
John Sodergreen, who publishes a weekly note on gas under the heading of “The Desk,” noted that the week ended July 28 was “one of the hottest weeks of the year,” adding:
“Power prices from the Northwest to the Southwest climbed to levels not seen in many moons. Power sector gas burns (and all else) were up all over the quad. This week, well, a bit of a reprieve.”
Turning to today’s storage
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