12 October 2020
- With the arrival of Hurricane Delta we have seen supply tightening at the end of last week. This has continued into this week as shown by the Implied Spot Supply in the chart of the week. This has coincided alongside a drop in the rate of storage injections. After several weeks of storage injections close to the 5-year mean, we are now seeing for weeks 41 and 42 a large deviation from this mean, with injections about 40% below the 5-year mean.
- Last week demand ended above the 5-year mean, but this week has started lowered. Our latest forecast is expecting some colder-than-normal temperatures to appear over the east coast in the coming 15 days, but this is only a weak signal. Due to Hurricane Delta we are seeing a decline in LNG exports. This, along with US gas production, is factored into our LNG to Supply Ratio. As rate of LNG cuts are currently greater than the cuts to LNG production, we are seeing a decline in this indicator.
- On the macroeconomic side of things we are seeing a more positive scenario and a continuation of the recent trends. Our Short-Term Macro Conditions, which encompasses manufacturing and consumption, show a continual increase since week 34 as recovery from lockdown continues. The ratio of buying vs selling only the market has been steadily increasing over the past few weeks. We have maintained a positive signal from this (meaning buying is outweighing selling) for several weeks now.