https://www.nrg.com/assets/daily-market ... update.pdf
Despite last week’s stronger-than-expected injection of 217 Bcf,
the storage outlook remains bearish for the next few weeks as
end-of-winter storage levels are projected to be ~1.9 Tcf. This
would represent the highest level of natural gas storage coming
out of winter since spring 2020, when storage exited at 2.0 Tcf,
but not near the exit of 2016, where storage levels ended at 2.46
Tcf. What made 2016 special? According to NOAA, Dec 2015 –
Feb 2016 was the warmest period on record in the U.S. for those
three winter months, and prices reacted accordingly, with the
March 2016 prompt settling at $1.711/MMBtu. Today’s market is
seeing similarities with above-normal temperatures (January 2023
was 6th warmest) pushing heating demand lower and near record
-setting production allowing supply to outpace demand. The
NYMEX natural gas 12-month strip price best reflects the market
change, being down 44% since 10/1/22 to end Friday’s trading at
$3.277/MMBtu. Wary of how fast the NYMEX rallied last summer,
market participants will be on the lookout for below-normal
temperatures this spring, slowing production, and growing exports
for anything that could push prices higher over the coming
months.
ng daily market
Re: ng daily market
Natural gas: Fasten your seat belts. WSJ.
Last year, natural-gas prices were—by some measures—the most volatile since the U.S. shale boom began about a decade earlier. Despite the recent plunge in prices, it could be just a preview of coming attractions. Here is one way to quantify the wild swings: There were 18 days last year when the benchmark Henry Hub futures contract’s daily closing prices moved by more than 10%, the most since the Nymex natural-gas contract made its debut more than three decades ago, according to Eli Rubin, senior energy analyst at EBW Analytics Group. Historical volatility—measured as the standard deviation for the previous 20 days of daily changes in the Henry Hub—averaged 81.6% on an annualized percentage basis last year, well above the 10-year average of 48.6%.
Remember that over the last 25 years most of the big natural gas price spikes have occurred outside of the winter heating season. Why? Because it is the fear of not being able to refill storage before the next winter arrives, which causes bidding wars between the utility companies.
Things that could push natural gas prices higher:
> Freeport ramping up to 2 Bcf per day of additional LNG exports by the end of March.
> A colder than normal March in the eastern U.S., which Joe Bastardi is now forecasting.
> Draws from storage continuing in April, possible if both of the above happen.
> Natural gas producers reducing their 2023 drilling programs. Since most of the Tier One leasehold that is held by AR, CRK, EQT, RRC and CTRA is now held-by-production, I do expect them to slow down well completions even if they have drilling rig commitments.
> A colder than normal March/April in Europe that drains their ngas storage and starts another bidding war for LNG cargos.
Demand for U.S. natural gas is growing much faster than demand for oil. It is now more than a 100 Bcf per day market. In the 1990's the U.S. natural gas market was below 25 Bcf per day. America is blessed to have an abundant supply of natural gas, the cheapest form of primary energy on Earth.
Last year, natural-gas prices were—by some measures—the most volatile since the U.S. shale boom began about a decade earlier. Despite the recent plunge in prices, it could be just a preview of coming attractions. Here is one way to quantify the wild swings: There were 18 days last year when the benchmark Henry Hub futures contract’s daily closing prices moved by more than 10%, the most since the Nymex natural-gas contract made its debut more than three decades ago, according to Eli Rubin, senior energy analyst at EBW Analytics Group. Historical volatility—measured as the standard deviation for the previous 20 days of daily changes in the Henry Hub—averaged 81.6% on an annualized percentage basis last year, well above the 10-year average of 48.6%.
Remember that over the last 25 years most of the big natural gas price spikes have occurred outside of the winter heating season. Why? Because it is the fear of not being able to refill storage before the next winter arrives, which causes bidding wars between the utility companies.
Things that could push natural gas prices higher:
> Freeport ramping up to 2 Bcf per day of additional LNG exports by the end of March.
> A colder than normal March in the eastern U.S., which Joe Bastardi is now forecasting.
> Draws from storage continuing in April, possible if both of the above happen.
> Natural gas producers reducing their 2023 drilling programs. Since most of the Tier One leasehold that is held by AR, CRK, EQT, RRC and CTRA is now held-by-production, I do expect them to slow down well completions even if they have drilling rig commitments.
> A colder than normal March/April in Europe that drains their ngas storage and starts another bidding war for LNG cargos.
Demand for U.S. natural gas is growing much faster than demand for oil. It is now more than a 100 Bcf per day market. In the 1990's the U.S. natural gas market was below 25 Bcf per day. America is blessed to have an abundant supply of natural gas, the cheapest form of primary energy on Earth.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group