For anyone that wondered what we would do with the record volume of natural gas placed in underground storage to begin the 2009-2010 winter heating season, the answer in recent weeks has been – consume it! The question of the winter may be whether extreme cold can rebalance the historically high storage levels that are a relic of recession-destroyed demand.
However, to reach the five-year average season ending storage inventory of about 1.36 Tcf would require huge, consistent, and unlikely withdrawals every week during January and February. This reality check may be one of the factors influencing natural gas futures prices for the balance of 2010 – prices that except for November and December are currently below $6 per MMBtu.
Another, non-weather related demand wildcard is manufacturing, which expanded for the fifth straight month to its highest level in almost four years according to the Institute for Supply Management’s ISM Manufacturing Index.
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