Energy Prospectus

In just two weeks the front month NYMEX contract for natural gas will be well over $3.00/MMBtu. < Most of the Wall Street Gang doesn't have a clue what is about to happen.
Major "Paradigm Shifts" like this are what causes BIG MOVES in stock prices.

Just a month ago, natural gas averaged $1.92 in September.

$3.00 is great, but it is just the beginning of a big increase in gas prices. My prediction:
> By the end of November ngas will be over $3.30
> By the end of December ngas will be over $3.50 and the first major cold wave could cause a spike to $4.00

WHY?
U.S. LNG exports are going to move up to maximum capacity in November because Europe and Asia need more gas.
Over 9.5 Bcf per day of increased demand just as winter weather begins.

Special Event Next Week:
EPG Webinar
Date Time: Wednesday October 21, 2020 02:00 PM Central Time (US and Canada)
Topic: "U.S. Natural Gas & NGL Market: Bullish Outlook for 2021 and Beyond"
Speakers: From Range Resources (RRC) are Alan Engberg, Vice President - Liquids Marketing, and Ben Stanton, Director - Energy Commodities & Market Analysis

You must register to attend this webinar.
Sabrina sent a registration email to all EPG members. If you can't find it, send an email to Sabina at energyprospectus@gmail.com

Bloomberg: Energy demand to receive a work-from-home boost this winter
Residential energy demand is set to increase in the coming months as millions of people in Europe, Asia and North America spend more time at home -- either working, studying or relaxing on their patios. With many offices still open, commercial use should remain steady, creating a so-called ‘double-heating effect’ that could lead to more use of everything from kerosene to natural gas. Commodity traders are also beginning to bet on a colder-than-normal winter, due to the formation of a La Nina weather pattern in the Pacific Ocean.

Natural Gas Intelligence: Raymond James says natural gas to jump in 2021, boosted by production cuts . NGI
The extensive oil production declines amid the coronavirus pandemic’s fallout cut deep enough into associated gas supplies to likely help drive up Henry Hub natural gas prices in 2021, according to Raymond James & Associates. “The 2020 oil crash is still likely to drive a massive imbalance in U.S. gas supplies in 2021,” Raymond James analysts said in a report Monday. “U.S. gas prices will still average around $2 this year but exit 2021 around $4.”

The Raymond James outlook follows other bullish forecasts for 2021 gas prices.

Morgan Stanley analysts, citing both production declines and a potential rebound in winter demand, said last week that Henry Hub prices could soar to $5.00/MMBtu in 2021. Researchers said that the drop in oil prices stalled growth in associated gas coming from previously robust oil production. That, combined with a roughly 50% reduction in spending by E&P companies from 2019, could result in a 3-4 Bcf/d year/year decline in associated gas output by the end of 2020. With West Texas Intermediate crude currently below the $40/bbl threshold needed to hold U.S. volumes flat in 2021, the analysts said, declines could continue.

EIA, meanwhile, said this month it expects tightening balances to boost Henry Hub spot prices to a monthly average of $3.38 in January. In the latest Short-Term Energy Outlook, monthly average spot prices are forecast to remain higher than $3.00 throughout 2021, averaging $3.13 for the year from a forecast average of $2.07 in 2020.

“Because expected natural gas production will be lower this winter than last winter, EIA forecasts inventory draws will outpace the five-year average during the heating season and end March 2021 at 1.7 Tcf in storage, which would be 6% lower than the 2016–20 average,” researchers said.

By the numbers:
U.S. onshore dry gas volumes are now expected to fall 3.9 Bcf/d year/year in 2021 to 87.6 Bcf/d, with the Marcellus shale the only basin anticipated to show growth – 0.5 Bcf/d year/year.
The market for U.S. gas expanded rapidly in the pre-pandemic world. Global demand for "The Clean Hydrocarbon" is increasing much faster than demand for oil.
2019 demand for U.S. gas:
86.1 BCF per day of domestic demand
7.8 BCF per day of exports via pipeline to Canada (2.7) and Mexico (5.1)
5.1 BCF per day of LNG exports < ramping up to 9.5 Bcf in November, 2020 and staying that high through at least April, 2021
99.0 BCF per day demand in 2019

So... U.S. gas production in 2021 will barely cover our domestic demand. By next summer, we will need to bring back more coal fired power plants. I wonder what AOC will have to say about that.