Frank - and all the gas house gang - a comment from DWR. I was surprised at the strength in ENE after the mediocre eps and AGA - sold some.
INJECTIONS LESS THAN EXPECTATIONS; GAS PRICE JUMP, BUT STOCKS LISTLESS
* The AGA reported weaker-than-expected injections of 54 Bcf for the week ended July 21.
* Although it was hot in certain regions, we cannot fully explain the low injections number.
* We remain bullish on natural gas prices due to the low amount of inventory expected heading into winter.
* Investors seeking gas exposure should look toward EOG, LD, BR, THX, CID, and HGT. Volatility in the natural gas/power markets should benefit ENE, EPG, and DYN.
INJECTIONS LESS THAN EXPECTATIONS; GAS PRICE JUMP, BUT STOCKS LISTLESS
AGA Reports Injections Of 54 Bcf; Smack In The Middle of Expectations:
The American Gas Association (AGA) storage survey reported estimated injections of 54 Bcf for the week ending July 21. The Street's expectations were for injections of 65-75 Bcf for the week. Total storage is now at 56.4% (1,857 Bcf) of full capacity vs. a five-year average of 64.0% (2,050 Bcf) during the comparable period. It is interesting to note that the Producing region is at 49% of full capacity vs. 77.6% at this point last year.
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||Unlike Last Week, AGA Report Driving Gas Prices Higher: After strong injections last week, injections once again returned to below-seasonal norms.
Storage levels continue to remain less than five-year average levels, which should be bullish for natural gas prices. The deficit versus the five-year average grew slightly to 193 Bcf. We continue to expect natural gas storage to end up around the 2.3-2.5 Tcf level at the end of the injection season (beginning of November).
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||We were surprised by the decline in injections due to the rather mild weather experienced around the country last week (it was hot in southern California and in the South). So the AGA numbers reported only a 1 Bcf injection for the Producing region, which is significantly less than norms.
With this report, the natural gas futures rose significantly (see below).
Nevertheless, an increase in the natural gas rig counts to record highs at 736 rigs could put some pressure on prices eventually, as deliverability could improve. However, the industry seems to be betting that production will increase to meet demand for the winter. (A few hurricanes could mess up that expectation.) |
