Record Setting Production and We're Going to Need It
THE One Minute Energy Update for 2/7/24
#BeWaryOfThe4DayWeekendPriceSpike #LongTermNatGasPricingCouldGetExpensive #RecordSettingProduction
***#NYMEXDown #LNGHelpingCurrentMarket #PG&EBasisDown #SoCalGasBasisDown #WeatherChanging #DemandDown #CarbonOffsets ***
***NYMEX ***– NYMEX prompt month dropped below $2.00 for a moment yesterday. It dropped to $1.99 briefly this morning already and just fell again.
***NYMEX pricing so far today - ****Open = $2.00, High = $2.04, Low = $1.95, Current = $1.97. NYMEX prices are down approximately $0.15 from 1 week ago and down approximately $0.5047rom 1 year ago. *
NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.47, 2025 = $3.40, 2026 = $3.75. *
*We are below the 50-day ($2.58), the 20-day ($2.50), and the 9-day ($2.17) average. *
RESISTANCE* – Starting @ $2.04/$2.10. *
THE PIVOT* @ $2.00.*
SUPPORT* - Starting @ $1.96/$1.90. *
*2023 NYMEX Monthly average = $2.73. 2022 NYMEX Monthly average = $6.64. 2021 NYMEX Monthly average = $3.84. *
BASIS* – Both PG&E and SoCal Basis prices are mixed today, up on some months, down slightly on other months. *
*The PG&E CG First of the Month Index averaged $9.83 for 2023. The SoCal CG First of the Month Index averaged $10.95 for 2023. The SoCal Border First of the Month Index averaged $8.14 for 2023. *
EXPORTS & LNG EXPORTS* – We’re getting close to 15Bcf/D on LNG, 5Bcf/D – 6Bcf/D to export to Mexico, another 15Bcf/D more LNG scheduled projects that are not on pause. Once the current administration’s pause is lifted, we could see as much as another 20Bcf/D of LNG being exported within the next 5 years. If this takes place, what direction do you think you think domestic prices will travel??? *
PRODUCTION/SUPPLY & DEMAND* – New record set yesterday with Production hitting 107.3Bcf. Today’s Est. Supply = 111.1Bcf. Supply 7 Day Avg. = 108.8Bcf. Today’s Estimated Production = 106.9Bcf/D. *
*Demand 7 Day Avg. = 118.80Bcf. Today’s expected demand = 120.0Bcf. Demand hit a minimum by 2-9-24 before increasing to “light demand” by 2-12-24, moderate by 2-14-24, reaching “strong demand” by 2-17-24, before falling to “moderate” by 2-21-24. Demand was expected to reach a near term high yesterday before falling off this weekend, only to increase dramatically as widespread colder temperatures return to vast regions of the US. *
***RIG COUNT – ***The next rig count comes out 2-9-24 after 10Am, PST. The latest rig count falls by 2 for a total of 619 active rigs. Oil rigs went unchanged for a total of 499 rigs. Natural gas rigs fell by 2 for a total of 117 rigs. The overall rig count is 20% below this time last year.
WEATHER* – Storms moving off the west Coast, seemingly weakening as they move east. Warmer than normal temperatures continue through the workweek before shifting colder. 6 – 10-day forecast = bearish. 10-15-day forecast = bullish. 3-month forecast = bearish. Summer forecast = bullish.*
STORAGE* – We are currently only 54Bcf above last year at this time and 130Bcf above the 5-year average of 2,529Bcf for this time of year. At 2,659Bcf, working gas remains within the 5-year historical range. The next Storage Report is due out 2-8-24.*
***CRUDE – ****Mid $73. Estimates - 2024 = $73.58, 2025 = $68.97, 2026 = $65.95 *****
CA RETAIL POWER* – CAISO falls below $49MWH. *
***UNRELIABLE
RENEWABLE ENERGY – ***The volatility in demand we are about to experience isn’t driven solely by increased heating demand. It is also driven by wind and solar failing to contribute their fair share to the overall energy source pool. But we in the know knew that already.
***CARBON OFFSETS – ***Many of our supply partners offer carbon offset with a vast menu to choose from if you are looking to shrink your carbon footprint. Feel free to contact us for more on carbon offsets whenever you like.
***THE BOTTOM LINE – ***In esteemed colleague/friend and I were discussing the massive price spikes that have taken place over the past 5 years on 4-day winter season weekends. As a reminder, any 3-day holiday weekend becomes a 4-day weekend when it comes to buying spot/index gas (you buy for SA/SU/the Monday holiday, and the following day, Tuesday). It seems to be that utility companies don’t want to be caught short on long weekends, so they are willing to buy on Friday at whatever the going price offer is. The traders are aware of this trend and have no problem jacking prices, especially when there is a buying frenzy at midday Friday. Why aren’t more people talking about this, especially in the media? We plan on making more noise about this. We will be paying close attention next week, leading into Presidents Day Weekend. Play it safe and DO NOT go over your daily nominations. And if you are on daily spot gas, may want to go to zero usage as much as you possibly can, just to be safe.
**Indicative Fixed Prices out of March ’24 **
PG&E CG SOCAL CG SoCal Border (+ $0.51 BTS)
1 MONTH $3.70 $4.10 $3.80
3 MONTHS $3.65 $4.04 $3.64
6 MONTHS $3.92 $4.74 $4.24
12 MONTHS $4.89 $5.89 $5.37
24 MONTHS $5.15 $6.00 $5.50
Summer Strip (April ’24 – Aug ‘24)
$3.96 $4.88 $4.38