It's gonna be a showstopper this week folks, we can feel it. The range of forecasts is fairly wide: +7 to -10 Bcf. Last Friday's Early View was even wider: +2 to -22 Bcf. This week always seems to give the market a bit of trouble though. Last year's report is a good example. This time last year, the market had been treated to five straight weeks of surprises. "For the first time ever, most surveys didn't even make the top 10 forecasts, our consensus included. This past week is a good example of why Q4 2011 has not been for the faint of heart: EIA called a 102-Bcf draw and the marketplace was around -94 Bcf. Did we mention that this was the fifth week in a row that the EIA was between 5 and 10 Bcf away from consensus...?" The range between forecast categories this week was a whopping 4.2, further pointing to a surprise this week. Our consensus this week came in at -1.8 Bcf and the median was -3 Bcf, well below the other surveys. Lots of confusion out there this week. One last, somewhat odd detail we spotted this week came when we compared the three categories themselves; independent analysts, bank analysts and surveys. Oddly enough, all the + or injection forecasts were in the independent analyst category. The bank category were all pulls, just like the surveys. Wishful thinking? Dunno. We just thought it an odd detail in a typically difficult week to forecast. Your 'umble editor came in at +2 this week. We closed last year's commentary of this report week this way: "Oddly, power generation was down year on year, weather was warm and demand was patchy. We've stopped trying to second-guess how we think EIA adjusts for error each week; it's a fool's game..." Sounds familiar. - The editor
Dan Biegler of Macquarie Energy called a +1 build this week - he was the only analyst attached to a bank that saw a build. He says that nationwide consumption-weighted HDDs totaled 116 for the week, down 51 week on week. Canadian net imports totaled 4.6 bcf/d, up 0.1 week/week; LNG sendout totaled 0.3 bcf/d, up 0.1 week/week; and Mexico exports totaled 1.3 bcf/d, up 0.1 week/week. "Our end of winter season forecast remains at1.85Tcf. There is an upward bias to this estimate due to the mild weather. The reason we have not revised it upwards is due to falling prices, which serve to increase our expectations for balance of winter demand-mitigating the effect of weak early winter weather." He adds that forward prices for 2013 are well above 2012 cash settles, but below most 2011 settles. This continues to indicate that the market should see a significant reversal of the 2012 power burn gains, but recent price weakness is reducing our expectations for the reversal of coal/gas switching. While an assumption of normal weather creates a large jump in winter 2012-2013 ResCom demand, we expect a partial reversal of coal-gas switching due to price to partially offset the likely increase in ResCom. Unfortunately the very mild weather in early December as well as the very high nuclear outages in November makes it difficult to extrapolate too much from the power burns we have seen season to date. We expect to be able to learn more from next week's storage report than this week's storage report. We would expect weather normalized power burns to show widening YOY deficits as we progress further into winter because natural gas prices fell sharply during Jan-Mar 2012-this resulted in a sharp increase in weather-normalized power burns during that period."
Reza Haidari of Thomson Reuters Analytics is forecasting a 7 Bcf injection, our HighBaller for the week. "The Balance model is pointing to a +27, while the Flow model says -14. Why the large divergence between the two models? The unseasonably warm weather we experienced last week (52 HDDs less than the previous week, 54 HDDs less than same week last year, and 66 HDDs less than normal) is probably impacting our Balance model to estimate less demand than actual. On the other the Flow model which picks up nominated flows from interstate pipelines could be missing key injection volumes especially in the error-prone Producing region which as a region has more non-seasonal/non-cyclical storage facilities. We believe the answer lies somewhere in between. Gas-to-power demand was further suppressed beyond the mild weather as reduced nuclear outage and increased hydro generation displaced 1.0 Bcf/d more gas in the power stack. As we indicated last week, we see price pressure continuing at $3.50/MMBtu for the next week until some clear signal of normal levels of heating demand is seen."
Barn Hill Energy is looking for a build of 6 Bcf this week. "Overall scrapes and the S&D model suggest a small withdrawal, but the cash to prompt spread and a subset sample of certain large fields in the east point to an even larger injection than the +6 we are forecasting. The wild card was the return of so much nuclear capacity last week that very well could have been the difference between a single digit number and an even larger number."
Raymond James is looking for an 8 Bcf draw. "The market was 2.9 Bcf/d tighter last week and has averaged 3.4 Bcf/d tighter over the last four weeks. We expect the market to run 1.0 Bcf/d tighter on a y/y basis for the week. Thus, our official forecast for this Thursday is for a withdrawal of 8 Bcf. If our forecast is right, the year-over-year storage deficit of 33 Bcf will decrease by 71 creating a surplus of 38 Bcf. Next week, RJ is looking for a draw of 74 Bcf.
Scott Speaker of JPM (at -4 this week) says there was some question as to whether the reference week in question would produce a net injection or withdrawal - "we are expecting a relatively hefty injection in the producing region - but our expected draw in the Upper Midwest and Northeast has the total leaning slightly toward the withdrawal side. We are assuming that the market is currently pricing in such a report, so it is unlikely that a single-digit draw would provide the catalyst for further downside. That said, a net injection would signal some loosening in the balance and could inspire a move into the price range where a demand pickup is assured," he says.
Bentek tells us that the risk to this week's forecast is for a weaker withdrawal or possibly a small injection. BENTEK's Producing Region sample is reporting a strong 10-Bcf injection. The Supply & Demand Daily model is still underestimating res/comm demand in the recent higher demand storage weeks, including the storage week ending Nov. 16. The Weekly Storage Report regional estimates were weaker than the EIA figures in all three regions, but particularly the Producing Region. EIA reported a 14-Bcf withdrawal in the Producing Region, and BENTEK predicted a 9-Bcf pull. Similar to the storage week ended Nov. 23, BENTEK has the least visibility in the Producing Region, which becomes more apparent in the shoulder seasons. This week Bentek sees a -16 back East, a build of 12 Bcf in the Producing region and +1 out west.
The good folks at UBS expect the EIA to report a 1-10 Bcf withdrawal in storage inventories, vs. 2011's 102 Bcf withdrawal and the 5-year average of a 94 Bcf withdrawal. We estimate inventories decline to 3,799 Bcf, flipping back to a surplus of 70 Bcf vs. 2011 and widening the surplus vs. the 5 year average to 238 Bcf. Last week's weather was 35% and 43% warmer than the comparable year ago week and 5-year average, respectively. Since September, weather has been 2% and 6% warmer than last year and the 5-year average. 75% of HDDs remain ahead of us. We estimate the weather-adjusted S/D balance loosened ~1 Bcf WoW for the week ending 11/30. We estimate the weather adjusted S/D balance has been ~1.6 Bcf/d undersupplied vs. the 5-year average and ~1.8 Bcf/d undersupplied vs. the year ago over the last month. We expect storage to exit next winter at 1.85 Tcf on March 31st (0.12 Tcf above the 5 year average)."
Energy Metro Desk Storage Survey
Average: -1.8 Bcf
Median: -3 Bcf
Range: -10 to +7 Bcf
Editors Forecast This Week: +2 Bcf
Early View Avg. from last Friday: --9.9 Bcf Bcf (median --7 Bcf)
Early View Range from last Friday: +2 to -22 Bcf
Number of Early View Friday forecasts: 1
'11 EIA Report: -79 Bcf (adjusted)
5-yr avg: -113 Bcf
3-yr avg: -158 Bcf
EMD Survey Low: -10 Bcf (Canaccord Genuity; Peter Marrin, SNL Editor)
EMD Survey HI: +7 Bcf (Reza Haidari, TR Analytics)
EMD Standard Deviation: 4.4
Std. Deviation Previous 8 Weeks (avg is 5.1): 4.9 (11/21) 8.5 (11/15) 3.7 (11/8) 3.7 (11/1) 2.1 (10/25) 5.8 (10/18) 5.5 (10/11) 4.4 (10/4)
Current Storage Level: 3,804
Surplus over 2011: -33 Bcf
Surplus over 5 Yr Avg: +168 Bcf
Last 4 Reports: 125 Bcf or 31 Bcf per week
Last 4 Reports, 2011: 17 or 4.25 Bcf per week
Last 4 Reports, 5 Yr Avg: 41 Bcf or 10.25 Bcf per week
EEI's Current Electric Generation Report: 71,513 (-8.9%)
EEI for 2011: 78,513
EEI Generation Year-to-date: 3,763,056
EEI Generation 2011, same period: 3,838,019
Each week we poll 40 professional storage forecasts for our weekly Natural Gas Storage Boxscores (as seen in each bi-weekly issue of Energy Metro Desk*). This is North America's biggest and most comprehensive natural gas storage survey and report.
We separate each forecast into three distinct categories:
1. Major Surveys (up to 6) + category avg.
2. Bank/Financial Firm Analysts (up to 14) + category avg.
3. Independent Analysts/Models/Non-financial Firms (up to 25) + cat. avg
This week, the preliminary tallies (including 36 estimates plus 3 categoric averages) are:
Survey's Polled This Week: 5
Survey's Forecast Avg: --3.6 Bcf (med. -3)
Bank Analysts Polled: 12
Bank Analyst Forecast Avg: -4.5 Bcf (med. -4.5)
Independents Polled: 19
Ind Analyst Forecast Avg: 0.3 Bcf (med. +3)
RANGE BETWEEN CATEGORIES: 4.2*
(* a range of 3 Bcf or more suggests a surprise EIA Report of + or - 5 Bcf)
APDM (Analog Projectile Devise Method or 'Dart'): -3 Bcf
This week's HiBallers:
Reza Haidari, TR Analytics: +7 Bcf
Barn Hill Energy: +6 Bcf
Donnie Sharp, Huntsville Utilities: +5 Bcf
Bentek S/D Model: +5 Bcf
PIRA: +4 Bcf
This week's LowBallers:
Peter Marrin, SNL Editor: -10 Bcf
Kyle Funck, Canaccord Genuity: -10 Bcf
Raymond James: -8 Bcf
Tim Evans, CITI: -7 Bcf
Steve Gregory: -7 Bcf
TFS Swap: -3/+2
ICE Bilateral: NA
Forecasts by 'Coop-Quartile' Distribution Range
10th Percentile (bottom 10%) @ -7 Bcf
25th Percentile (bottom 25%) @ -5 Bcf
75th Percentile (Top 25%) @ +2 Bcf
90th Percentile (Top 10%) @ +4.5 Bcf
Notes of Note:
**Manufacturing sector capacity utilization was down 0.8% from the revised number for September. Capacity is up 1.4% YOY.
**ISM's Purchasing Manufacturer's Index for November fell 2.2% to 49.5% from 51.7% in October. This marks the fourth month in the last six months that the manufacturing sector has contracted.
**Canadian net imports totaled 4.6 bcf/d, up 0.1 week/week
**LNG sendout totaled 0.3 bcf/d, up 0.1 week/week
**Mexico exports totaled 1.3 bcf/d, up 0.1 week/week.
**Total outages were down 22GW week on week.
**Nuclear outages were down 11GW to 11GW
**Coal outages decreased 10GW to 14GW
**Overall outages are down 14GW relative to prior year levels due to decreased coal outages YOY.
**Last week, weather was 35% warmer than last year and 43% warmer than the 5-year average.
**Since September, weather has been 2% and 6% warmer than last year and the 5-year average.
EARLY VIEW RANGE FOR NEXT WEEK: -70 to -120 Bcf
Last Year: -100 Bcf
5 Year Avg. -144 BcF