We may want to hit pause on locking in forward positions....
THE One Minute Energy Update for 3-20-24
***#NYMEXDown #PG&EBasisCouldFallhard #SoCalGasBasisCouldFallHard #WeatherGood #CarbonOffsetsHere!GetYourCarbonOffsets!! ***
***NYMEX pricing so far today - ****Open = $1.75, High = $1.76, Low = $1.68, Current = $1.69. NYMEX prices are down approximately $0.03 from 1 week ago and down approximately $0.65 from 1 year ago. *
NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.48, 2025 = $3.48, 2026 = $3.79.*
*2023 NYMEX Monthly average = $2.73. 2022 NYMEX Monthly average = $6.64. 2021 NYMEX Monthly average = $3.84. *
*We are below the 50-day ($2.04), the 20-day ($1.76) and below the 9-day ($1.72) average. *
RESISTANCE* – Starting @ $1.77/$1.80. *
THE PIVOT* @ $1.73. *
SUPPORT* - Starting @ $1.70/$1.67. *
BASIS* – Both PG&E and SoCal Basis prices continue to weaken and could fall further once the Injection Season starts. *
*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 EXPORTS, NG EXPORTS, NG IMPORTS ***– LNG demand averaging 13.3Bcf/D. Mexico exports averaging 6.3Bcf/D. Canadian imports averaging 4.0Bcf/D.
PRODUCTION/SUPPLY & DEMAND* – Today’s Est. Supply = 106.7Bcf/D. Supply 7 Day Avg. = 106.27Bcf. Today’s Estimated Production = 100.8Bcf/D. Today’s expected demand = 114.9Bcf – highest demand in over a week. Latest Demand 7 Day Avg. = 106.67Bcf/D. Demand remains moderate this week. *
***RIG COUNT ***– As of 3-15-24 - Oil added 6 rigs for a total of 510 active rigs. Gas added 1 rig for a total of 116 active rigs.
WEATHER* – *NatGasWeather.com* has this to say for the next 6 days, “Weather systems will track across the northern US w/highs of 20s to 50s, along w/areas of rain and snow. The southern US will be mild to nice w/highs of upper 50s to 80s and areas of showers. Overall, moderate demand for the next 7-days.”. 5 – 10-day forecast = bullish. 10-15-day forecast = bullish. 3-month forecast = bearish. Summer forecast = bullish. *
STORAGE* – Tomorrow’s projected storage report is a 1Bcf withdrawal. Compare that to 55Bcf last year and the 5-year average of 27Bcf. We are currently 336Bcf above this time last year and 629Bcf above the 5-year average of 1,696Bcf. At 2,325Bcf, we are above the 5-year historical range.*
***CRUDE – Changing direction. ****Current price = $80.97. Forward estimates: 2024 = $80.55, 2025 = $74.20, 2026 = $69.91. *****
CA RETAIL POWER* – CAISO just over $30 per MWH. *
RENEWABLE ENERGY* – The update for RE today is that more and more EVs are being manufactured, increasing the demand for lithium. You may want to look at buying lithium stocks/ETFs to offset the inevitable increasing power prices. Didn’t see that coming, did you??*
***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 – *A very astute colleague of mine pointed out to me last night (that’s right – we never stop talking or thinking about energy, we’re freaks for it)* ***and pointed out these bears to me - SoCal storage is nearing full capacity. PG&E storage could hit full capacity by end of Q2. Supply and Production are strong. Demand is below normal. Those are all good bears. Now here come the potential bulls - scheduled summer pipeline maintenance, less production, above normal temperatures pushing demand to above normal, LNG exports increasing, Mexico exports increasing, power generation demand increasing due to coal going away and W&S providing little to nothing to the power grid. This puts us at a fork in the road of making decisions. Do we gamble and wait, or do we take our current winnings and relax?
**Indicative Fixed Prices out of April ’24 **
PG&E CG SOCAL CG SoCal Border (+ $0.51 BTS)
1 MONTH $2.89 $2.70 $2.42
3 MONTHS $2.90 $2.89 $2.55
6 MONTHS $3.40 $3.92 $3.56
12 MONTHS $4.54 $5.14 $4.87
24 MONTHS $4.94 $5.59 $5.17
Summer Strip (April ’24 – Aug ‘24)
$3.29 $3.73 $3.35
Winter Strip (Nov ’24 – Feb ’25)
$6.39 $7.39 $7.01