R59...NG futures...March 30th reporting date is considedered the end of winter. Currently for 2007 NG reserves are sitting at 2571Bcf. The 5 year average on March 30th is 1232Bcf. Last years number on March 30th is 1696Bcf.
For 2007 to reach 2006 numbers we would need to draw out 875Bcf in the next 9 drawdowns to March 30th. We will easily do this. This Thursday and next Thursday should have drawdowns of over 200Bcf +. The week after around 150Bcf. That would leave less than 300Bcf over the remaining 6 weeks. Easy. Conclusion: On March 30th, 2007 NG reserves will be below 2006 numbers.
For 2007 to reach 5 yr average numbers we would need to draw out 1339Bcf in the next 9 drawdowns to March 30th. We won't do this, however it will be within 250Bcf. Accuweather has below normal temperatures forecast for 30 days for the midwest and east coast and 90 day below normal temperatures for east coast.
I could easily see NG spiking over $8 in the next two weeks and then settling back down into the low $7's as the contract expires the end of February. If we drew down, say 250Bcf this Thursday, I see it hitting $8.50 intraday. Then in March I can see it go to the $6's, but my opinion is that it does not go below $6 this Spring at all. We didn't go below $6 last year in the Spring and we will end this winter below last year's numbers.
Also, El Nino is weakening which then brings hurricane season back into effect and it's possibilities on supply disruption. This will keep traders wary of pushing NG prices too low.
