DGAZ - Natural Gas: As Long As Production Remains Above 90 Bcf Price Rallies Will Be Unsustainable.

• This Thursday, we expect the EIA to report 1,751 bcf of working gas in storage for the week ending March 19.
• We anticipate to see a draw of 31 bcf, which is 5 bcf larger than a year ago but 20 bcf smaller vs. the five-year average.
• Over the next 30-day period, total natural gas demand (consumption + exports) is expected to average 92.2 bcf/d, 0.2 bcf/d lower than a year ago.
• Higher prices will only destroy potential natural gas demand in the electric power sector, which already is under pressure due to the growing share of renewable generation.
• Therefore, if prices continue to rise and if production remains above 90 bcf/d, we will continue to add short positions in May and June contracts.

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