May 12 Natural Gas Weekly Storage Forecast And Update On stockpile trade Balance.

Total Supply/Demand Balance

We estimate that total demand for American natural gas totaled just under 440 bcf (down 3% from previous week, but up 2% y-o-y). The deviation from the norm increased only marginally from +17% last week to +17.5% this week (see the chart below). After rising for two consecutive weeks, national consumption dropped by 3% w-o-w, pushed down by moderating weather and weaker gas usage in the Electric Power sector. Exports remain the most dynamic part of aggregate demand. Despite a drop in exports to Canada (related to pipeline maintenance), total natural gas exports from the U.S. (including LNG) rose by almost 30% y-o-y in the week ending May 12.

Total Natural Gas DemandSource: GeckoiCapital

 norm defined as simple average over the last nine yearsThe annual decline in dry natural gas production has slowed to just -1.2%, which represents the smallest gap so far this year. We expect this trend of decelerating y-o-y decline to continue partly due to base effect and partly due to genuine recovery in output. We expect dry gas production to expand in annual terms in June/July 2017. Imports from Canada were down 2% w-o-w, bringing aggregate supply to 79 bcf per day. Overall, total supply/demand (SD) balance should be positive and is estimated to reach almost 115 bcf this week. The volume is some 12 bcf larger than a week ago, but almost 22 bcf below 5-year average for this time of the year (see the chart below). In absolute terms, this kind of volume is bullish for natural gas prices. Indeed, natural gas prompt month contract is already up 3.4% since April 27 and is up 55% from a year ago.