2/27/25: Nat Gas Report day/weekend set up:The video goes over my reasoning for the cold back half of March and front of April. The models do not see it, but I do!!! I show a good graphic of price vs storage (natgasweather.com). And as we shall soon see, it going to be all about storage in about six weeks!!!
Today’s report was in line with industry experts and their projections for a larger than average withdrawal of 261 BCF of NG, bringing total storage to 1840 BCF. This more than 400 Bcf below last year’s bottom of 2,259 Bcf. They are also below the five-year average for end-of-winter storage of 1,870 Bcf. Storage inventories at 1,840 Bcf have already been drawn down by nearly 2,100 Bcf since the start of winter. That is more than 600 Bcf faster than last winter’s drawdown during the same period. As shown, the inverse relation between storage and pricing should keep prices elevated through the shoulder season. The increase in heating demand, electric power load, and historic LNG exports are eating into exiting supplies, as producers continue to show restraint and discipline.
Last week EQT released their quarterly guidance stating that they do not plan to increase rig activity and will continue to throttle output on a day to day basis to meet spot demand. They are following a program of “tactical restraint”. EQT Corp. is not looking to invest in natural gas production growth in 2025 as it expects demand to eventually outpace supply and push prices higher in the coming years. The strategy differs from the one Expand Energy Corp. stated today. That it plans to add 600 MMcf/d of natural gas production by the end of the first quarter as part of a broader strategy to grow output and extend the reach of its marketing as fundamentals improve. After curbing output and delaying turning wells to sales last year in response to stagnant natural gas prices, the company plans to bring online 90 wells by the end of March as demand has strengthened. Most of this gas is headed to the Gulf coast to feed LNG facilities. Unlike EQT, who serves North East US and Mid-West US demand centers. Who are under supplied and have a lack of pipeline infrastructure.
So mid and long-range pricing look positive for NG, but it is the short term where our bets are made. So, in the short term the weather will play a dominant role in the price structure. I expect a delay in the cold coming for later March and April, but my belief is still there, below average cold. My previous target for entry was $3.65 to renter my long position. Although earlier this week I had waivered after the weather models started to print a colder period for March 11-15, and was looking to enter a bit higher to $3.80-$3.85 level, but has since backed down. It is looking that the Tropical forcing is going to delay the SSW event talked about here by a week or so. It is still showing up in the long range, but the shorter range is starting to print warmer. I am now of the thinking that the original idea at the $3.65 level is the place to enter my longs. Once the models pick up the SSW event influenced cold around day 13,14, and 15. I’m back in long again!
I entered four $3.85 puts Monday night after exiting my March puts and have held onto them after seeing the models run warmer for the next 15 days. I will decide tomorrow if I will exit them or hold them over the weekend. I entered at the $4.30 level and know when to walk away with money in the hand, but I will still wait until tonight’s and tomorrow’s mid-day runs to assess. If I do decide to hold over the weekend I will let it be known.
Happy trading and good fortune
Keep it Burning!
