Not much movement for NYMEX. SoCal Basis plummets.

The One Minute Energy Update - April 23, 2024

Today’s NYMEX natural gas pricing saw a modest climb, opening at $1.79 and peaking at $1.80, with the day's lowest at $1.74, and a current rate of $1.778. This shows an increase of roughly $0.05 from last week, though it's a significant $0.45 drop from the same period last year.

Looking ahead, NYMEX futures for 2024 are projected at $2.53, with 2025 seeing a sharper increase to $3.52, and 2026 at $3.97. Comparatively, the monthly average for 2023 so far stands at $2.73, a stark contrast to the 2022 average of $6.64, and higher than 2021’s $3.84.

The market is currently positioned above the 50-day, 20-day, and 9-day averages, with support levels starting at $1.74 and resistance anticipated at $1.84 and $1.90.

Basis points show mixed signals with PG&E CG Basis stabilizing, while SoCal CG Basis forecasts a decline for summer and the remainder of 2024. Significant LNG exports were recorded at 10.9 Bcf, alongside steady exports to Mexico and imports from Canada.

U.S. production remains robust despite price-induced pullbacks, maintaining record levels with today’s estimated supply at 106.3 Bcf. Demand is also on a high, aligning with moderate to high forecasts for the upcoming week.

In terms of storage, U.S. inventories concluded the withdrawal season well above the five-year average, up 424 Bcf from last year and 622 Bcf above the norm, offering a buffer against potential price hikes.

Weather patterns indicate cooler than usual temperatures across most of the U.S., with a warm-up expected later in the week. The weather outlook for the next three months remains bullish, especially during the summer months from June to August.

Crude oil prices are currently down at $81.94, with forward estimates showing a gradual decline over the next couple of years.

California's retail power rates are hovering around $21 per MWh, while the market for carbon offsets is seeing increased activity, particularly from Africa due to new clean cooking initiatives.

Renewable energy sources are making significant strides. According to the IEA, 2023 saw a 50% increase in renewable capacity, led by China, setting the stage for renewables to overtake coal as the leading global electricity source by early 2025.

The Bottom Line: There are emerging opportunities in both NYMEX and Basis trading, with potential for investors to lock in prices for both short and long-term contracts at competitive rates.