North America gas markets short-term outlook November 2017: Supply growth threatens sustained price rally
The chilly start of the winter widened out the storage deficit and led to a price rally in early November, but we have not adjusted our view of the winter strip as the risks around our price view remain relatively balanced. We believe the reason bulls continue to stay hopeful is because natural gas is the marginal source of generation in the US power grid during cold winter weeks. However, the supply-demand imbalance is now more dependent on wind generation than it has been in the past. Weeks with high degree day totals and low wind generation are what bulls dream of this winter. However, our extremely bullish production outlook caps much excitement over winter power burns. Gas production has increased by 2.8 bcfd between US and Canada from last month and the uptick is far from over. We are also watching a few market drivers closely as they could have an upside impact on our price forecast.