Natural Gas Price Forecast - Dec 26

[dan_s]

Notes below are from Josef Schachter, a highly respected energy sector analyst based in Canada.

The EIA's natural gas report out last Thursday showed the second largest withdrawal of the season so far. Storage fell 125 Bcf to 3.62 Tcf with the largest decline in the Midwest with a 48 Bcf withdrawal. This compares to a decrease of 87 Bcf last year and the 5-year average withdrawal rate of 63 Bcf. With winter here, withdrawal rates should pick up significantly.

We expect to see many weeks of withdrawals over 200 Bcf per week this winter season. US Storage is now 0.6% above last year’s level of 3.60 Tcf and is 3.8% above the five year average of 3.49Tcf. The percent differences are clearly shrinking and when they go negative on a comparison basis natural gas prices should rise materially. NYMEX is today priced at US$3.84/mcf.

Colder weather expected in the coming week in the east coast of the US has lifted prices. Spikes over US$5/mcf should be seen this winter during very cold days when electricity systems are maxed out.

US LNG exports to the seven operating LNG plants rose to a nine-month high at 14.4 Bcf/d. Some plants are now exceeding the name plate. Cameron LNG (rated at 2.0 Bcf/d is now moving 2.3 Bcf/d), Cheniere’s Sabine Pass (rated at 4.5 Bcf/d is moving 4.9 Bcf/d). Global Ventures Plaquemines LNG Phase 1 (2.6 Bcf/d) commenced operations recently. It continues to build other trains as this will be the largest LNG plant contemplated so far in the US as It took only 30 months to complete after receiving the final investment decision (FID). Too bad we can’t move so quickly on this side of the border.

We recommend buying the very depressed natural gas stocks during periods of market weakness as we are seeing with this year’s tax loss activity. These stocks are very cheap now. We see much much higher gas prices in 2H/25 as quite a number of new LNG plants come onstream over the next 12 months; one in Canada and two more in the US. In Canada the first train of LNG Canada comes on during Q2/25 and in the US Corpus Christi Stage 3 begins production of LNG (1.5 Bcf/d). In 2H 2025, Golden Pass LNG plans on bringing on the first two trains of this new three train export facility.

[dan_s]

https://schachterenergyreport.ca/2024/11/josef-schachter-on-howestreet-november/

As a 40 year veteran of the Canadian Investment Management Industry, Josef Schachter has experienced several exceptional and turbulent global economic and stock market cycles. With his primary focus on the Energy Sector, Josef is able to weave global political, economic and monetary issues with current energy data into a compelling story of what’s going on in the sector, what is to come, and why.
Video recorded on November 25, 2024 at the link above.