Supply levels out; Demand is high

While everyone is going crazy about the high level of supply of natgas, the demand has increased in almost every area. One very interesting and strong demand is the Res & Comm demand. During the early Sept period, it has fallen to minimal levels every year (3-4 bcf). But this year the demand is over 10 bcf/day. While this may sound small, it is actually really important. Is this demand coming from unusual sources (transportation)? Or is this demand changing from other sources (eg burning natgas instead of electricity for hot water heaters)? What is the source of the doubling of base demand from the Res & Comm. sector?

Overall with demand much higher, the huge increase in supply has been offset. The key question is how much of the increased demand is the result of weather and how much the result of new natgas demand. The results this week show a much higher level of base demand, but not quite enough to balance the new supply. But the base demand should increase over time, while if the drilling rigs ever slow down, supply would ease. The point is all is not lost. Consumers are responding to the low natgas prices by increasing demand, even in this recession. If we had a strong economic recovery, the demand for natgas would be higher than even these elevated levels of supply.