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Natural Gas Market: Our EOS Storage Indices Are Below Market Expectations

Natural Gas Market: Our EOS Storage Indices Are Below Market Expectations

This report covers the week ending October 9, 2020.

Total Supply-Demand Overview

We estimate that the aggregate demand for U.S. natural gas (consumption + exports) totaled around 607 bcf (or 86.7 bcf/d) for the week ending October 9 (+1.9 bcf/d w-o-w (week over week) and +1.6 bcf/d y-o-y (year over year)). The deviation from the norm remained positive and actually increased from +8.9 bcf/d to +13.0 bcf/d.

We estimate that the aggregate supply of natural gas in the contiguous United States (production + imports) totaled around 647 bcf (or 92.4 bcf/d) for the week ending October 9 (-0.9 bcf/d w-o-w and -8.5 bcf/d y-o-y). The deviation from the norm remained positive but moderated slightly from +5.7 bcf/d to +5.0 bcf/d.

Here’s our latest forecast for the next two weeks:

October 16

  • Total supply: 92.1 bcf/d (-9.9 bcf/d y-o-y)
  • Total demand: 86.5 bcf/d (-1.7 bcf/d y-o-y)

October 23

  • Total supply: 93.3 bcf/d (-9.3 bcf/d y-o-y)
  • Total demand: 91.2 bcf/d (+2.0 bcf/d y-o-y)

Thus, total balance is projected to remain tighter (vs. a year ago), ensuring that the annual storage “surplus” will continue to shrink.

Please note that these forecasts are updated daily.

Source: Bluegold Research estimates and calculations

Natural gas consumption (seven-day average) is projected to decrease by -0.3% over the next seven days (from 71.5 bcf/d today to 71.3 bcf/d on October 16). Overall, daily natural gas consumption is projected to reach a major “seasonal low” on October 10 and is then projected to trend higher (slowly), but is also currently projected to remain mostly below last year’s level (see the chart below).

At the same time, we should remember that the weather forecast can change very quickly and at any moment, so we need to be very careful during this time of the year. Natural gas is primarily a

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