HardAssetsInvestor

Written by Sumit Roy  |

October 04, 2012

NatGas Prices Buoyed By Cold Start To Winter, More Upside Remains As Rig Count Hits 13-Year Low

Details

Natural gas may continue to rally despite a larger-than-expected increase in inventories last week.

Natural gas prices fell after the Energy Information Administration reported that operators injected 77 billion cubic feet into storage last week, slightly above the 70 to 74 bcf that most analysts were expecting.

The injection was well below last year’s 97 bcf build, but close to the five-year average build of 76 bcf.



Inventories now total 3653 bcf, which is 244 bcf above the year-ago level and 296 bcf above the five-year average (calculated using a slightly different methodology than the EIA).





In our view, the year-over-year inventory surplus remains on track to be eliminated by the start of the winter withdrawal season. A forecasted cold start to the heating season raises the possibility that inventories could move into a deficit versus the year-ago levels sometime in November.