Milder Weather Forecasts Pushing NatGas Prices Down

THE One Minute Energy Update for 3-28-24

#HappyMLBOpeningDay

#MilderWeatherForecastsPushingNatGasPricesDown

***#MayIsNowTheFrontMonth #NYMEXUpSlightly #PG&EBasisDown #SoCalGasBasisDown #Weather #CarbonOffsetsSoldHere ***

***NYMEX pricing so far today - ****Open = $1.71, High = $1.76, Low = $1.68, Current = $1.72. NYMEX prices are up approximately $0.03 from 1 week ago and down approximately $0.30 from 1 year ago. *

NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.43, 2025 = $3.41, 2026 = $3.75.*

*2023 NYMEX Monthly average = $2.73. 2022 NYMEX Monthly average = $6.64. 2021 NYMEX Monthly average = $3.84. *

*We are below the 50-day ($1.90), but above the 20-day ($1.74) and above the 9-day ($1.67) average. *

RESISTANCE* – Starting @ $1.77/$1.82. *

THE PIVOT* @ $1.73. *

SUPPORT* - Starting @ $1.68/$1.65. *

BASIS* – Both PG&E and SoCal Basis prices continue to fall, especially PG&E. We could see a further collapse next week. All factors, currently, are bearish for CA Basis. *

*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. *

***LNG EXPORTS, NG EXPORTS, NG IMPORTS ****– LNG exports are down, pushing natural gas stockpiles higher. *

PRODUCTION/SUPPLY & DEMAND* – Production grew by 4% in 2023, same as in 2022. Today’s Est. Supply = 106.4Bcf. Supply 7 Day Avg. = 106.22Bcf. Today’s Est. Production = 101.8Bcf. *

Today’s Est. Demand = 110.5Bcf. Latest Demand 7 Day Avg. = 110.17Bcf. 7-day Demand forecast remains moderate. Natural gas demand in 2024 may hit all-time highs.

***RIG COUNT ****– Due to markets being closed tomorrow due to Good Friday, this week’s rig count will be released later today. A day early – I can hardly contain my excitement! Last week’s rig count stands at 509 active oil rigs, 112 active gas rigs, and 3 miscellaneous rigs. *

STORAGE* – The most recent forecast was a 31Bcf withdrawal. Today’s actual storage report comes in with a 36Bcf withdrawal. We are now 430Bcf above this time last year and 669Bcf above the 5-year average of 1,627Bcf. At 2,296Bcf, we are above the 5-year historical range. Stockpiles are 40% above average. *

WEATHER* – NatGasWeather.com has this to say for the next 6 days, “A chilly start to much of the interior US to start the day w/lows of 10s to 30s for moderate demand. A cool front will bring showers to the East the next couple days w/highs of 30s to 60s. Additional weather systems will track into the western US. Most of the US will warm above normal this weekend into the start of next week w/highs of 50s to 70s for light demand, followed by a cool shot sweeping across the US Tue-Wed. Overall, moderate demand much of the next 7-days.” *

*5 – 10-day forecast = bearish. 10-15-day forecast = bearish. 3-month forecast = bullish. Summer (June – Aug) forecast = bullish. *

CRUDE –* Current price = $82.71. Forward estimates: 2024 = $79.12, 2025 = $73.71, 2026 = $69.65. *****

CA RETAIL POWER* – CAISO was as low as $16 per MWH over the past weekend. MWH are cheap because natural gas is the main power generation source. However, California doesn’t have enough power generation at any time to supply peak demand on most days. The fix right now is battery farms storing energy and releasing when needed. Walking a tightrope. *

RENEWABLE ENERGY* – The forecast is 12% less hydropower production in the western market region of California, the Southwest, and the Northwest in 2024 than in 2023. And last year’s hydropower production was at a 22 year low for the Western states. We need more reliability in our energy sourcing and RE is nowhere near the level needed. Translation – more dependency on natural gas.*

***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 – “****With strong natural gas-fired power generation required this summer to trim the US market's huge storage surplus, high levels of coal stockpiles held by utilities pose a significant downside risk to gas prices, according to S&P Global Commodity Insights analysts.” S&P Global Commodity Insights. *

What this means to the C&I sector end user – we could see prices fall further before IF ALL DRIVING FACTORS REMAIN BEARISH. Be patient with this market and be ready to execute when the time is right.

**Indicative Fixed Prices out of May ’24 **

PG&E CG SOCAL CG SoCal Border (+ $0.51 BTS)

1 MONTH $2.98 $2.57 $2.32

3 MONTHS $2.98 $3.36 $2.95

6 MONTHS $3.40 $4.06 $3.78

12 MONTHS $4.58 $5.20 $4.93

24 MONTHS $5.00 $5.65 $5.25

Summer Strip (April ’24 – Aug ‘24)

$3.33 $4.00 $3.65

Winter Strip (Nov ’24 – Feb ’25)

$6.30 $7.00 $6.64