Cold Weather In The West Adds Support
THE One Minute Energy Update for 3-4-24
#ColdWeatherInTheWestAddsSupport #ShoulderSeason
***#NYMEXUpStrong #PG&EBasisRisingTemporarily #SoCalGasBasisSetToFall #WeatherSupportingBullsInTheWest #CarbonOffsetsCheap!! ***
***NYMEX ****– NYMEX is running hot this morning as demand increases and supply falls. Weather is driving demand. This current bull ruin should be temporary. *
***NYMEX pricing so far today - ****Open = $1.87, High = $1.98, Low = $1.87, Current = $1.98. NYMEX prices are up approximately $0.30 from 1 week ago and down approximately $0.80 from 1 year ago. *
NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.51, 2025 = $3.45, 2026 = $3.77.*
2023 NYMEX Monthly average = $2.73. 2022 NYMEX Monthly average = $6.64. 2021 NYMEX Monthly average = $3.84. We remain well below the last 3-year averages at a 40+ month low.
*We are below the 50-day ($2.27), and above the 20-day ($1.75) and the 9-day ($1.76) average. *
RESISTANCE* – Starting @ 1.87/$1.92. *
THE PIVOT* @ $1.84.*
SUPPORT* - Starting @ $1.80/$1.76. *
BASIS* – Both PG&E and SoCal Basis prices should be bullish for the next few days as we wait for the current storms in the West to move on. A year ago, SoCal CG Basis was approximately $1 higher than where it currently is. PG&E CG Basis is also down strongly from 1 year ago but still carries a strong premium for the time being. We should see a downward correction after these storms move east.*
*The 2023 PG&E CG First of the Month Index averaged $9.83. The 2023 SoCal CG First of the Month Index averaged $10.95. The 2023 SoCal Border First of the Month Index averaged $8.14. We remain WELL BELOW the last 3-year averages. *
***LNG ****– LNG exports fell by 7% in Feb ‘24 compared to Jan ’24 exports. The current administration continues to hit “pause” due to big donors needing to reap more margin on their climate control projects. Ever feel like you’re being played? *
PRODUCTION/SUPPLY & DEMAND* –**** ****Today’s Est. Supply = 107.1Bcf/D. Supply 7 Day Avg. = 107.47Bcf. Today’s Estimated Production = 101.1Bcf/D. *
*Latest Demand 7 Day Avg. 3-4-24 = 108.21Bcf/D. Today’s expected demand = 100.78Bcf. *
***RIG COUNT ***– As of 3-1-24 – Second straight week of an overall rig count increase. Oil rose by 3 for a total of 506 active rigs, down 86 from 1 year ago. Natural gas fell by 1 for a total of 119 active rigs, down 35 rigs from 1 year ago. Production, however, isn’t falling as drilling becomes more efficient.
WEATHER* – NG Weather has this to say for 3-4-24 – 3-10-24, “Weather systems will impact the West w/rain, snow, and mild to cool highs of 30s-50s. Strong high pressure will rule the eastern 2/3 of the US w/highs of 50s-70s for the Midwest Northeast besides colder 20s-30s N. Plains. The central, southern, and eastern US will be nice w/highs of 50s-80s for light demand. Overall, very light demand the next 5-6, days, then slightly stronger next weekend.”*6 – 10-day forecast = bearish. 10-15-day forecast = bearish. 3-month forecast = bearish. Summer forecast = bullish.
STORAGE* – End of Withdrawal season is expected to end up with 2,250Bcf – 2,300Bcf in storage. Bearish numbers but we’ll see how it holds up against projected production cuts. *
*CRUDE – Continues its bull walk. C**urrent price = $79.31. Forward estimates: 2024 = $76.90, 2025 = $71.22, 2026 = $67.52. *****
CA RETAIL POWER* – CAISO stays just above $34MWH.*
RENEWABLE ENERGY – The EU will continue to buy solar panels from China (that uses coal to manufacture the panels) as EU based solar panel manufacturing companies close their doors because they cannot compete with China’s far cheaper operating costs. Let me ask again, ever feel like you’re being played?
***CARBON OFFSETS – ***We’re going to see a lot of carbon offsets coming out of Africa as their government finally gets serious about implementing “clean cooking” mandates/projects. If you’re looking to buy carbon offsets, our menu of carbon offsets continues to grow as we add more and more supply partners. Most companies will be mandated to curb their carbon footprint. SOME carbon offsets may be the easiest, cheapest, and most effective way to do so.
***THE BOTTOM LINE – ****Let’s hit pause for the next few days as NYMEX needs to relax and settle itself down. Once the current storms in the West move east, we could see some great Basis buying opportunities. Be ready to act quickly on the next downturn. It won’t last forever. *
**Indicative Fixed Prices out of April ’24 **
PG&E CG SOCAL CG SoCal Border (+ $0.51 BTS)
1 MONTH $3.39 $3.76 $3.27
3 MONTHS $3.23 $3.97 $3.52
6 MONTHS $3.80 $4.79 $4.45
Winter Strip (Nov ’24 – Feb ’25)
$6.50 $7.50 $7.04
12 MONTHS $4.80 $5.65 $5.30
24 MONTHS $5.10 $5.95 $5.55
Summer Strip (April ’24 – Aug ‘24)
$3.52 $4.50 $4.05