Some analyst are calling for natural gas to go up to $12+ if we have a cold winter.
NG storage is ~20% below the five year average and the injection season is nearly over. If this continues AND we have a cold winter, the price COULD rise further. however, I wouldn't bet the farm on a big price increase. The drillers can fill up the pipelines quickly in response to higher prices.
Why is NG injection so low? Are the gas companies intentionally holding back gas or are storage field operators just being restrictive of gas purchase, and if so, why?
It's only speculation on my part, but I believe it is at least partially due to a lengthy and intense cooling season, particularly in the south and west. Secondarily, low natural gas prices restricted drilling of new principally gas wells. Finally, the lack of takeaway option in the Permian has resulted in a large basis differential and forced producers to flare the gas. The main product in the Permian is oil which in a worst case scenario can be shipped by railcar or stored locally. Neither of those options is viable for natural gas. The increasing price of oil has spurred Permian drilling, while intensifying the NG problem.
For a NG well to be viable and meet a gas company goal, what is the relative ROI needed for the well? At what price does ROI meet that goal and well production as well? Do they want ROI in 5 years or 10 years for instance? Some smaller gas companies seem to be ok with lower producing wells while larger ones shoot for the moon for production.