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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: quehubo who wrote (26239)	10/8/2003 9:10:04 PM
From: ild	Read Replies (1) of 206093

From JPM: Flashpoint: We expe t this Thursday's EIA natural gas storage report to show an injection of around 75 bcf. • Expectations for a more moderate build this Thursday are based on last week's very cold weather. The weather becomes a much more direct determinant on storage trends during the winter months vis-à-vis the summertime, which is why early indications of a cold October have been met with so much enthusiasm in gas markets. Population-weighted heating degree-days last week were more than triple the prior week's, and 71% colder than normal. This week's storage number should therefore ease substantially versus the 4-week average of 100 bcf, but we still expect a number well north of the 5-year average of 57 bcf. • The silent supplier: LNG. According to the very latest data, LNG imports during the month of September averaged a record high 2 bcf/d, roughly triple the run rate earlier this year. We believe this explains roughly 30-35% of the 3-3.5 bcf/d apparent surplus (i.e. injections exceeding the weather-adjusted prediction) since the refill season began in April. • The demand pickup has been notable at sub-$5 gas, however. As prices eased below the $5 level in late August, an apparent demand pickup has cut the weather-adjusted surplus from about 3 bcf/d to well under 1 bcf/d over the past six weeks. Looking ahead, news of upcoming nuclear plant refueling outages should boost near-term gas demand, countering expectations for moderating temps in much of the country. Conclusion: We believe natgas will trade within a $4.50-5 range thoughout the rest of this month, with short-term trends heavily influenced by the weather outlook.

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