Shares of Niska Gas Storage
Changes are afoot
Analysts have been calling for a bottom in natural-gas prices for months now, as the shale boom has caused a gas glut and decade-low prices. It appears a bottom could finally be arriving. Shares of United States Natural Gas
While rising gas prices are a boon for Niska, they're not the only factor in the equation. What really seems to be driving the stock's surge is concern that storage capacity may run out before heating season picks up in November. The chart below shows current storage levels (in red) compared with the five-year range (in gray).
As you can see, storage levels are way ahead of the norm -- 57%, to be exact -- for this time of year. Available storage capacity in the continental U.S. tops out around 4,150 billion cubic feet. For comparison, Niska offers 206 BCF of storage in North America. It seems the likely result of the lack of storage capacity would be either a greater demand for storage facilities such as Niska's, driving up prices for its services, or a further cutback in production, which would send up gas prices. Both would be good news for Niska as a price increase would make storage more attractive and increase arbitrage opportunities.
We'll learn more about the company's prospects and the impact of limited storage capacity when it reports earnings in the coming weeks.
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