Now is not the time to panic.

The preceding sentence may not be the most reassuring method of beginning this weekly feature but it does acknowledge that those who track natural gas storage in the U.S. might be inclined to, well, panic. That’s because the approaching winter coincides with a severe storage deficit relative to recent years.

“Production continues to expand and infrastructure continues to be added to improve the exploitation and distribution of the growing production,” EnVantage Inc. said in a recent report. Speak those words aloud in a calm, soothing voice, seated below your wind chimes with a cup of chamomile tea within reach.

Feel better? Good. Here’s more from the report:

“With all of that being said, and recognizing the growing production levels, the low storage levels [both in the U.S. and Canada] and growing demand [from domestic and exports] could place interesting challenges on supplies as the coming winter progresses.”

Nothing kills a “Kumbayah” moment like the phrase, “interesting challenges.”

In the week ended Sept. 28, storage of natural gas in the Lower 48 experienced an increase of 98 billion cubic feet (Bcf), the U.S. Energy Information Administration reported. The figure, compared to the Bloomberg survey’s consensus average of 88 Bcf, resulted in a total of 2.866 Tcf. That is 18.2% below the 3.502 Tcf figure at the same time in 2017 and 17.5% below the five-year average of 3.473 Tcf.

Of concern to EnVantage is that U.S. natural gas storage could enter winter as much as 300 Bcf below the five-year average minimum level. The impact on prices will depend on the weather.

“A normal to cold fourth quarter leads us to conclude there is perhaps a 40 cent to 60 cent upside for the first quarter [Henry Hub] but not something we are projecting at this point,” EnVantage wrote.

AccuWeather is anticipating a season influenced by an El Niño pattern. The forecasts see mild temperatures for the remainder of 2018, but January and February will see an active southern storm track tearing through the southern plains. East Coast cities like New York and Philadelphia could see average February temperatures that are 4 degrees to 8 degrees colder than last winter.

That could mean a dose of snow and ice storms for the Southeast, Tennessee Valley and Gulf Coast. Florida should brace for severe weather and flooding, AccuWeather said.

Mont Belvieu, Texas, propane hit another high for the year by registering its sixth straight week above $1 per gallon (gal). While the price is at a 51-month high, propane is still a relative bargain. That’s because it is selling at about 60% of West Texas Intermediate (WTI) crude oil and about 54% of Brent crude, EnVantage said. A year ago, the relationship was 78% to WTI and 70% to Brent.

The price at Conway, Kan.—about 79 cents/gal—is a bargain compared to Mont Belvieu. A year ago, the price difference between Mont Belvieu and Conway was less than a nickel.

Last week’s price of butane at Mont Belvieu was at its highest point since July 2014. At Conway, butane broke through $1/gal for the first time since the start of the year.

Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.

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