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作者: May Flower , 发表于: 2017-01-06 (2882天前) @ 雅歌

Natural Gas Flat After EIA Reports Bearish -49 BCF Weekly Natural Gas Storage Withdrawal, Likely Influenced By Re-Balancing; Natural Gas Demand Rises For 4th Day With Monstrous -50 BCF Daily Draw Expected Today As Storage Surplus Quickly Reverts Back To A Deficit; Cold Temperatures This Weekend To Give Way To Prolonged Period Of Unseasonable Warmth Next Week

Friday, January 6, 2017
In its weekly Natural Gas Storage Report, the EIA announced on Thursday that natural gas inventories fell by a surprisingly small -49 BCF for the week of December 24-30. This was 21 BCF less than my projection of a -70 BCF draw and more than 30 BCF less than the analyst consensus of a -82 BCF withdrawal.

Latest Natural Gas EIA Storage Levels

Figure 1: Click here for more information on natural gas inventories.
The -21 BCF miss was by far the largest for my model in the past nine months. There was not a single element of the multiple components that make up the model that projected anywhere in the vicinity of a -49 BCF draw and the temperature pattern last week, while mild, does not in any way support a draw that low, even taking into account holiday-induced demand suppression. Not to make excuses, but the most likely explanation for the error is an adjustment by the EIA. As I have commented each of the previous three weeks, there were anomalously large withdrawals in the South Central Region that brought that region's storage surplus, the largest of any region for the past several months, rapidly to a storage deficit last week. Looking at the weekly error in my model for these three weeks (which can be found on my error page HERE), my projections erred too small each of these three weeks (-135 BCF projected vs -147 BCF observed, -202 BCF vs -209 BCF, -224 BCF vs -237 BCF), which I attributed to misses in the South Central Region. This added up to -30 BCF less than the observed withdrawal during this period. This week, inventories across the South Central Region rose by +14 BCF versus the 5-year average -22 BCF withdrawal, 36 BCF bearish. The -30 BCF 3-week miss to the downside for my model corresponds well with today's -21 BCF single-week miss to the upside and the South Central region's surprising weekly storage injection this week after 3 weeks of exceptionally large withdrawals point to this as the culprit for today's inexplicably low withdrawal. That is a long-winded way of saying that today's small withdrawal is likely a one-week anomaly attributable to EIA end-of-year re-accounting rather than a sudden loosening of what has been a tight natural gas market. Essentially, yesterday's report and the three before it balance each other out. I expect a return to our more established level of supply/demand tightness in next week's report, the first of 2017. This all being said, I apologize for the larger miss and will continue to work hard to bring you the best projections possible.

Natural Gas Withdrawals-To-Date Historical Comparison

Figure 2: Click here for more information on natural gas inventories.
Regardless, the -49 BCF withdrawal was a bearish 58 BCF smaller than the 5-year average -107 BCF withdrawal for December 24-30. Natural gas inventories dropped to 3311 BCF while the storage deficit versus the 5-year average narrowed from -79 BCF to just -21 BCF (and subsequently has reverted to a small surplus due to early-week warmth this week). It was the smallest weekly withdrawal in the past 5-years and the third smallest in 25 years. As mentioned, the South Central region saw by far the weakest storage injection, while all regions except for the Mountain Region saw bearish draws versus the 5-year average, but in-line with expectations. Despite the bearishness of this single Report, as the Figure to the right shows, the -736 BCF in total gas withdrawn from storage in the 7 weeks since the withdrawal season began would rank 2nd in the last 5-years behind only 2013-2014's -859 BCF and 4th in the last 25 years. The 5-year average for this 7-week span is -507 BCF while 2009-2010 saw the largest draw at -1230 BCF and 2006-2007 the smallest at a mere -223 BCF. See more on seasonal withdrawal statistics HERE. The initial reaction to the -49 BCF withdrawal amongst natural gas traders was, understandably, negative, as the commodity promptly dropped from being nearly flat day-over-day to down -2% in the minutes following the report. However, as traders began to analyze the EIA's report and perhaps come to some of the same conclusions I mentioned above, the commodity rallied and turned positive by the close, gaining less than a cent or 0.2% to $3.27/MMBTU. It was the first daily gain in the last 5 sessions that had decimated the commodity to the tune of -17%. The ETF UNG performed even better, rising 1.5% due to some adjustments from yesterday and continued strength following the close of commodities trading at 2:30 PM EDT. Despite the very bearish weekly draw and generally neutral to bearish builds expected for the next few weeks, natural gas is still trading at a small 1.5% undervaluation versus its 8-month average Fair Price, which indicates a nearly appropriate price. I made no additions to my position yesterday, holding a long position valued at 45% of my target position size, preferring to the let the dust settle first from the big miss and waiting to see just how bearish the temperature pattern gets before accumulating further. My plan remains to add to this position on further weakness and to be fully invested should natural gas reach $3.00/MMBTU, although it is difficult to get too excited about going long in size with the near-term forecast as bearish as it is presently.

Today's Forecast Departure From Average High Temperatures

Figure 3: Click here for more information on on the near-term forecast.
Natural gas demand will climb for a fourth consecutive day today as an arctic airmass encompasses nearly the entire nation. The major change from yesterday will be the spread of the cold to the deep south, setting the stage for a disruptive winter storm. High temperatures from Jackson, Ms to Birmingham, Al to Atlanta, Ga will fall 15F-25F day-over-day to from the low-to-mid 50s to the low-to-mid 30s today, 15F-20F colder than average. Temperatures across the northern Plains and Midwest will remain in the icebox today, with highs below zero across North Dakota and northern Minnesota, in the single digits from Minneapolis to the suburbs of Chicago, to the teens across most of the central Plains and Ohio Valley, 10F-20F colder than average. The largest temperature anomalies today will be across west Texas and the southern Rockies where highs will only be in the mid-teens from Amarillo, Tx to Colorado Springs, 30F colder than average. After a quick dusting to few inches of snow overnight, the major demand centers of the East Coast from Washington, DC to Boston will see stable temperatures in the low-to-mid 30s today, around 5F colder than average. Overall, the forecast nationwide population-weighted mean temperature will drop a further 4F day-over-day to 31.1F today, 8F colder than average. This will be the coldest day of the 2016-2017 winter to date. Since peaking at 48F on Monday, mean nationwide temperatures have plunged a whopping 17F.

There are two weather events related to the arctic blast that bear discussing. First, a rare snow and ice storm is poised to impact the deep south this evening through Saturday morning. Winter storm warnings are flying from Birmingham, Al through Atlanta, Charlotte, and Raleigh all the way to the Atlantic Ocean at Virginia Beach. These cities could see 3-8 inches of snow, which for that part of the country will likely be very disruptive. Further south, a period of sleet and freezing rain is likely, potentially as far south as the Florida panhandle. The likely impact on natural gas is that, with a fresh snowpack, temperatures will plummet Saturday evening behind the storm system with lows dropping well into the teens from Birmingham to Atlanta and the single digits from Charlotte to Raleigh to Richmond, upwards of 30F colder than average. This has the potential to boost daily nationwide natural gas withdrawals on Saturday above -50 BCF/day for a second straight day, more than double the 5-year average. The second event to discuss is the ongoing "Atmospheric River" phenomenon ongoing across California. The region has received heavy rain and mountain snow throughout the week with a second wave set to impact the region Saturday and Sunday. This is a true drought-busting storm. Coastal areas through the Central Valley of California look to receive total 1-week rains in excess of 5-10 inches. The westward-facing elevations of the Sierra Nevadas will see excessively heavy precipitation of 12-30 inches of liquid equivalent and, with the majority of this falling as snow across the highest peaks, some areas could see ungodly snow totals of 10-15 feet. One impact on natural gas has been that with cloudcover persisting throughout the week, solar output has tumbled. As the Figure below shows, daily solar generation has been below the 60-day average and last year's output for four out of five days this week, tallying just 168 GWh through yesterday.