Updated Charts AND Estimate of shut-in Production.

Recently a major change has occurred in the NatGas Markets. The SPOT price has skyrocketed. Note in the chart below how on Oct 1st, the price JUMPED by a dramatic amount. (click on the graph for the full graph)

This price increase was seen in Canada as well. So the price increase was not regional or specific to a given area, but widespread. WHY?
Demand has come back!
Look at Robry's demand for NatGas from the Residential & Commercial Demand Model. Demand rose from 4-5 bcf a day to 14-15 bcf/day very quickly. This large increase in R&C Demand is very important. For the NatGas market the heating is the biggest use of the commodity. When cold weather hits, demand skyrockets (that is the reason for storage!). When Canada starting getting hit with cold weather and it spread to the Northern Plains, the NatGas demand increased by 10bcf/day.
That 10bcf a day increase in demand is significant for a total demand of 60 bcf day market. This increased usage of NatGas because of colder weather means the gas has somewhere to go. The gloom and doom view of an oversupply of natgas this fall has been 'taken care of' by colder weather. Increase the demand for a product and an oversupply will be corrected- and fast.
10/02/09...5.20....3.11....4.74....8.25..11.57..12.93..13.01..58.80
10/09/09...2.06..13.19..12.81..13.39..16.85..14.89..14.61..97.79
10/16/09...8.82..................................................................18.82i

As a result of the increased demand, all the 'offline' or shut-in production came back. Sure enough in the supply data, the production jumped. This can be seen in the following charts:



But this also gives us an idea of how much gas was shut-in during September. Using some simple estimates, about 32 bcf of gas was shut-in in September. The gloom and doomers will argue that some gas is still shut-in. But the price of natgas in the spot market has shot up and Todd1956 has reported the line pressures have fallen significantly. Both of these would make sense if the demand for Natgas has shot up and shut-in production was restarted.

This is a rare case where all the data from different sources make sense. We had some early cold weather arriving (note Canada counts for cold weather) which increased demand for Natgas. The market responded by increasing the price and producers responded by bringing back shut-in production.