Storage Glut Pushing Production Down?

THE One Minute Energy Update for 4-15-24

***#StorageGlut #DropInDemand #Production Pullback? ***

***#NYMEXDown #PG&EBasisUp #SoCalBasisUp #WeatherBearish #CarbonOffsetsSoldHere ***

***NYMEX Pricing So Far Today - ****Open = $1.77, High = $1.79, Low = $1.70, Current = $1.71. NYMEX prices are down approximately $0.05 from 1 week ago and down approximately $0.38 from 1 year ago. *

NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.50, 2025 = $3.52, 2026 = $3.94.*

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

*We are below the 50-day ($1.77), the 20-day ($1.75) and the 9-day ($1.80) average. *

RESISTANCE* – Starting @ $1.83/$1.88. *

THE PIVOT* @ $1.78. *

SUPPORT* - Starting @ $1.72/$1.67. *

BASIS* – PG&E CG Basis prices are up a few cents as is SoCal CG 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 averaging 12.6Bcf/D. Exports to Mexico = 6.0Bcf/D. Imports from Canada = 5.3Bcf. *

PRODUCTION/SUPPLY & DEMAND* – Today’s Est. Supply = 103.68cf. Supply 7 Day Avg. = 104.38Bcf. Today’s Est. Production = 100.3Bcf. *

*Today’s Est. Demand = 91.1Bcf. Latest Demand 7 Day Avg. = 93.8cf. 7-day Demand forecast is low to very low. *

***RIG COUNT ****– Down 3 from the previous week. The most recent oil rig count fell by 2 to 506 active rigs. The natural gas rig count fell by 1 to 109 active rigs. *

STORAGE* – Bearish storage levels are increasing. We are 435Bcf above this time last year and 633Bcf above the 5-year average of 1,650Bcf. At 2,283Bcf, we are above the 5-year historical range. *

WEATHER* – NatGasWeather.com has this to say for the next 6 days, “A weather systems will impact the East Fri-Sat w/showers and thunderstorms. Although, temperatures will be quite comfortable over the northern US w/highs 50s to near 70F, while very nice to warm over the southern US w/highs of 60s-80s, locally 90s. Next week will be very nice over the US w/highs of 50s-80s.”*

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

CRUDE –* Falling. Current price = $84.60. That’s’ up $2 from yesterday’s opening price. Forward estimates: 2024 = $83.13, 2025 = $76.39, 2026 = $71.42. *****

CA RETAIL POWER* – CAISO just over $23 per MWH. Down over $7 per MWH from 1 week ago.*

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, many of our Supply Partners offer carbon offset menus (type of carbon offset, price per unit, etc.) for review and purchase.*

RENEWABLE ENERGY* – As electricity demand continues to set records here in the US and around the world, where is all this extra energy going to come from and how will the current grids handle the increased demand going forward?? Not well if history is anything to go by…*

***THE BOTTOM LINE ****– Leaving this up from last week as it still stands for the start of this week. The driving factors/fundamentals remain bearish in the short term. However, here are a few driving factors that show up every summer, bringing the bulls with them; heatwaves driving cooling demand days above normal, pipeline maintenance, and with limited pipeline optionality in the West, we are exposed to potential transportation (basis) price spikes. Keep these in mind when you find yourself chasing (what you believe is) the bottom of the market. *

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

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

1 MONTH $2.55 $2.45 $2.15

3 MONTHS $2.98 $3.35 $3.01

6 MONTHS $3.41 $4.12 $3.77

12 MONTHS $4.65 $5.30 $4.67

24 MONTHS $5.10 $5.82 $5.42

Summer Strip (April ’24 – Aug ‘24)

$3.39 $4.08 $3.56

Winter Strip (Nov ’24 – Feb ’25)

$6.42 $7.24 $6.81