As you already know, any realistic capacity estimate is much lower than 3800. Most sources I've read think it is somewhere in the 3500 range. Additionally, storage is regional, and the entire year-over-year surplus is in the producing and west regions. There is still a deficit is in East. There is a 103bcf surplus over last year in the producting region alone....to put that in perspective, the entire surplus is 119bcf. That points to massive capacity issues developing in this region earlier than last year, and consequently production curtailments occurring earlier than last year. The East (where the majority of storage resides) remaining in a yoy deficit, with the producing/west regions taking some temporary pain bodes well for winter prices.
That being said, I feel that even if there weren't any storage capacity issues, we wouldn't challenge anywhere near 3800 this year. Following the next three reports, which could have injections equal to or less than last year, there is one pretty typical week, but the four weeks following have extremely easy yoy weather comps where the surplus can be eroded further. Comps don't become difficult until October, but by then the market will tighten significantly yoy if NG remains under RFO. It is conceivable that the 119bcf surplus can be noticeably withered down by October. That is weather dependent, of course, but no scenario I can envision takes storage to 3800. |
