Natural gas supply/demand
Posted: Wed Sep 06, 2017 12:08 pm
Read this: https://rbnenergy.com/communication-bre ... et-reality
In my opinion, the U.S. natural gas market is under-supplied for this coming winter. However, we have lots of natural gas reserves in the ground. More accurately, we have HUGE natural gas reserves. So, my opinion is that gas prices will increase heading into this winter if natural gas storage levels go below the 5-year average (almost sure to happen this month) AND we have a normal winter. A cold December will probably push gas prices above $3.50 in the first quarter of 2018 because utility companies will bid against each other for supply. Beyond this winter, gas prices depend on where storage ends up after the winter. If storage is depleted by a cold winter, the price of gas should remain over $3.00.
In my forecast/valuation models I am assuming Henry Hub gas averages $3.00 in 2018. In the forecasts, I adjust for each company's hedges. Antero Resources (AR) has more than 95% of their 2018 natural gas production hedged at $3.91/MMBtu, so my forecast for AR is solid. They also have a high percentage of their 2019 gas hedged at $3.70.
Read the article above and I think you will agree that the coal companies are in big trouble. Natural gas will continue to push coal out of the power generation market. Low gas prices will also make it tough for solar to complete.
As I have posted here before, the Marcellus/Utica is "God's Gift to America". Access to such an abundant supply of energy should offset cheap labor in foreign markets and give U.S. manufacturing companies a competitive edge on the rest of the world. We just need the idiots in Washington to figure this out. Of course taking down statues of old men and determining the nation's bathroom rules seem to be more important.
In my opinion, the U.S. natural gas market is under-supplied for this coming winter. However, we have lots of natural gas reserves in the ground. More accurately, we have HUGE natural gas reserves. So, my opinion is that gas prices will increase heading into this winter if natural gas storage levels go below the 5-year average (almost sure to happen this month) AND we have a normal winter. A cold December will probably push gas prices above $3.50 in the first quarter of 2018 because utility companies will bid against each other for supply. Beyond this winter, gas prices depend on where storage ends up after the winter. If storage is depleted by a cold winter, the price of gas should remain over $3.00.
In my forecast/valuation models I am assuming Henry Hub gas averages $3.00 in 2018. In the forecasts, I adjust for each company's hedges. Antero Resources (AR) has more than 95% of their 2018 natural gas production hedged at $3.91/MMBtu, so my forecast for AR is solid. They also have a high percentage of their 2019 gas hedged at $3.70.
Read the article above and I think you will agree that the coal companies are in big trouble. Natural gas will continue to push coal out of the power generation market. Low gas prices will also make it tough for solar to complete.
As I have posted here before, the Marcellus/Utica is "God's Gift to America". Access to such an abundant supply of energy should offset cheap labor in foreign markets and give U.S. manufacturing companies a competitive edge on the rest of the world. We just need the idiots in Washington to figure this out. Of course taking down statues of old men and determining the nation's bathroom rules seem to be more important.