Energy Prospectus

Note below from RBC Capital

Natural Gas Navigator Published September 27 2023 00:15:00 EDT
Shoulder Turn – September 2023 Issue
We still think that from their recent rangebound state, natural gas prices can
manage a slow grind higher going into next year and achieve higher levels in 2024.
However, we note that our 2024 prices are currently lower than consensus in our
base/middle case, as the lid that currently sits atop prices will not necessarily
dissipate in our view (given healthy storage levels, no real structural domestic
demand growth, and still elevated production numbers). Yet, later next year, risk
is indeed skewed to the upside from these levels (putting our high scenario prices
in play) ahead of the coming chunk of LNG export capacity additions. For now,
we refrain from changing our view other than highlighting that our high scenario
prices are more in play for 2024 than they are for 2023, especially in the latter
half of the year.
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Over the next 2 months that we see the delta to where storage was a year ago to shrink. If so, I forecast that ngas will average $3.25 in 2024 with a price dip in Q2 and then steady increase to over $4.00 in Q4. We just need a normal winter in the US and LNG exports to remain near capacity.

I'm happy to see steady progress in cutting down the storage surplus to the 5 year. Certainly when we look at current vs 5 year ago demand, things look better.

However, I'm a bit concerned that our ongoing Higher Than Average continental US temps this summer which lead to the steady decline in surplus will continue into the winter. If that happens the reverse situation of weekly lower than expected demand will occur.

The latest El Nino forecasts leave plenty of wiggle room for a warmer or colder than average winter.

Either way I'll keep a significant position in NG Producers to capture potential upside if things get cold, or provide diversification if a recession shows up and hammers oil stocks.

Kevin