In fact, robry's comments are rather startling in context of magnitude and time frame. I was surprised when I first read it earlier this week, but I've found nothing that would definitively refute his major assertion - and indeed, in the many years I've followed his data, he's seldom missed the mark by much, and remembering he's talking parity price for ng and oil, not the same price per X unit:
(Corrected post at 10:52am est At this juncture, I remain convinced that natgas moves to parity to oil by End-of-April 2014.")
.....NATGAS: Waiting for todays EIA release, EIA-weighted storage model sits at a 100 BCF draw, Capacity model says
.....118. Given last weeks 83 baseline, the EIA number is expected to be 17 BCF to-the-bullish. Capacity modeling says
.....that more-realistically the week was 35 BCF to-the-bullish.
.....The baseline shifts throughout the winter have fairly accurately fallen in line with the rise or fall in the producing-region
.....skew (where the modeling "thinks" the EIA is severely overweighting salts. On weeks that withdrawals hit the salts,
.....the baseline-scores bullishly improve. On weeks that withdrawals are pulled away from the salts, the baseline scores
.....degrade.
.....The same relationship looks like it exists with the analyst-concensus on the draws... when salt-storage ratchets up,
.....the concensus under-estimates the draw (presumably because other models are blind to the skew and the overcount
.....of the salts)... and when salt-storage ratchets down, the concensus over-estimates the draw.
.....Last-week salt-storage activity ratcheted up, and my own modeling draw (and likely the EIA) come in well above.
.....concensus. The same looks to repeat again for next weeks report, as for the present week salt-withdrawals continue
.....to ratchet up, and the same will likely present itself for a third week (trends and seasonal problems suggest real
.....problems come April unless bottom-hole testing gets delayed en-mass).
.....As markets like to ralley on concensus underprojections (to the EIA), this feeds into a bullish push over the next 3 weeks.
.....Add to that that LDC's are likely to push injection-scheduling up several notches (once bottom-hole testing completes
.....and injection-season opens) to deal with the YOY deficit and especially the injection-season-ending inventories implied
.....by the longer-term model (which excludes last year as an outlier - no coal-to gas switching in the longer-term model).
.....Then add to that the flying economy... Industrial-natgas-scheduling lags end-of-quarter consumption severely and
.....chances are we add a chunk of industrial demand come April and the EIA numbers get even more bullish.
.....Then add to that the collapse in drilling-rig counts... Northeast pipes curves have the pattern (over the last year) of
.....jumping on new collections of connections (as the inventory of uncompleted and unconnected wells comes on line)
.....then flattening in advance of the next wave of connections, as the boom in shale-gas goes on. In the background of
.....US drilling (non-NE), many pipes are in steep decline. NE production benefitted last fall as larger and larger collections
.....of connections appeared with each exponential bump up, but presumably the potential of net decline is also rising
.....exponentially on the recent adds (shale-gas has huge decline curves). Mathematically, future exponential adds look
.....unlikely to match the exponential growth in rapid-decline wellhead inventories, And the whole of the US northeast
.....looks to me to be on the edge of shifting from fastest-growing to fastest-declining as the mathematics are questionable.
.....At this juncture, I remain convinced that natgas moves to parity to oil by End-of-April 2014. There are just too many
.....extremes lining up on the bullish side of analysis.
.....Only potential negatives that I could see would be some unexpected international military flare-up (Iran or North Korea).
.....Iran seems, however, still in stalemate (Both iran and the western world remain to be doing what they seem to want to
.....to do). However, North Korea seems to be talking much too much lately, and their is always the possibility that
.....Pyongyang comes to a point that it actually believes in its own rhetoric and persuades itself into a crysis. Europe looks
.....to me to be totally detached from US economics, though it is not detached from US equities.
.....ECONOMICS: No changes (again). We remain locked in a tandem uptrend with both consumptive and industrial flows
.....seasonally-rising, and with consumptive flows strongly above the industrial flows.
.....With the end-of-quarter and end-of-month timeframe days away (when gas-flow patterns seem to like to change)
.....I am thinking that industrial activity ratches up quite a bit come April to adjust to the boom in consumption. At todays
.....heights consumption probably takes a breather after Easter (these numbers are absolutely wild), but industrial
.....production (unless imports have stepped up suddenly) has a long, long way to catch up.
.....PRODUCTION / RESIDENTIAL & COMMERCIAL MODELING: Production Model remains in audit with problems
.....still to be resolved. Will be adding three new pipes to the production model shortly, while a fourth (already in the
.....model) appears to be skewed by withdrawals and needs to be rebuilt. R&C continues to be impacted by the skew
.....issues (it has been turned into a "balancing item" by the other models) which will be delt with in time by the
.....replacement of the EIA-weighted model with the new (presumed more accurate) capacity model. (The storage
.....demand catagory (also off) still represents the EIA-weighted model, but asside from the R&C, production, and
.....storage models all other models (Generation, Industrial, Import, and Export) are walled off from the skew and
.....production-counting problems, and presumed accurate).
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