Gas inventory drops. Blip or the beginning of a trend?

[jpak]

http://www.energybulletin.net/18825.html

Unbeknownst to many Americans, the demand for natural gas during the winter months, with rare exceptions, greatly exceeds real-time domestic extraction volumes. This gap is overcome by tapping into the surplus natural gas injected into vast underground caverns during the warmer months. Historically, storage volumes increase from April through October and decrease during the heating season (November through March).

The most recent storage update from the Energy Information Agency, covering the week ended July 21, packed an unwelcome surprise, when it reported a net withdrawal of natural gas to the tune of seven billion cubic feet (bcf). According to AmericanOilman.com, this was the first time this decade that EIA reported a weekly decline of natural gas in storage inventories occurring between mid-April and mid-October. That week in July typically sees a build of 61 bcf.

Even though current storage volumes are running 20% above historical norms, this surprise development pushed spot market prices above the $7.50/MMBtu mark for this first time in four months.

At first blush, the market’s reaction seems hasty and overwrought. Even if weekly injections between now and Thanksgiving lag behind historical volumes by 50%, there still would be more than enough natural gas to ride out a severe winter. So why are energy traders and speculators so quick to bid up prices?

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full article here:

http://www.zmetro.com//community/us/wi/madison/renew/archives/2006/08/natural_gas_inv.html#more

[cdsilv]

1. Natural gas is not only used for heating etc....

...it is also used in the manufacturing of plastic (as a raw material input)

[hatrack]

4. Most critically, it's used to manufacture agricultural fertilizers

Ever notice how corn in farmers' fields is planted about nine inches apart? Without massively goosing the soils with natgas-based fertilizers, no way, Jose.

[One_Life_To_Give]

2. Electricity Demand up with recent heatwaves.

[4dsc]

3. I hate to see a cold winter

All its going to take is a very cold winter(we missed the bullet last winter) and we'll see NG prices go through the ceiling.. Most American's don't realize just how much of a fine line we are walking with NG supplies..