Raymond James still forecasts $4.00 ngas price in 2025

[dan_s]

Notes below are from Raymond James "Energy Stat of the Day" dated 7/29/2024:

U.S. natural gas markets remain as topical as they’ve ever been, but that hasn’t meant good things for prices - front month Henry Hub prices are more than ~20% lower than a year ago.

Today’s Energy Stat addresses several cross-currents with U.S. natural gas supply/demand since we last published in early March 2024: U.S. production trends (curtailments and return of volumes), shifts in U.S. LNG project timing, impressive natural gas power burns, and disappointing cumulative demand from several other categories (Canada, Mexico, industrial).

While we mark 2024 prices to market reasonably lower, this report defends our very bullish stance on 2025 prices. Our $4.00 2025 average natural gas price is still ~25% above the strip.

We also summarize our medium- and longer-term view for U.S. electric load growth and the resulting opportunity for higher natural gas-fired power generation. Later, we highlight our top picks on the theme with Antero Resources (AR) leading the pack in E&P. In midstream, Cheniere (LNG) is our top-rated “gas name,” but Williams (WMB) and DT Midstream (DTM) remain incredibly topical and also have modest near-term and compelling long-term upside drivers.
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My forecast models are now based on Henry Hub natural gas prices averaging $3.50 in 2025. If we have a normal 2024/2025 winter, we could see much higher natural gas prices in 2H 2025.
Antero Resources (AR) is a strong candidate for moving back into the Sweet 16 after the merger of SilverBow Resources (SBOW) into Crescent Energy (CRGY) closes, which is expected to happen this week. Range Resources (RRC) is another "Gasser" that looks very good if HH ngas goes over $3.50.

[Fraser921]

I prefer looking at actuals vs SWAG,s and Forecasts, i will get more bullish when and if it hits 4

Today Sept 2024 HH cracked important 2 level and now in the 1's!!!

[dan_s]

SEP24 NYMEX contract at $2.12.

To understand why Raymond James and most of the Wall Street Gang are bullish on U.S. natural gas prices after 2024, go to the Range Resources website and go through slides 13-21 of their July presentation.
Here is the direct link: https://ir.rangeresources.com/static-files/cd9b4c2c-f4fe-4118-9659-a4c3528b95b1

Focus on slide 21: Each week EIA tells us about the surplus of U.S. natural gas in storage compared to the 5-year average. That is misleading because EIA is looking backwards. Based on today's level of demand for U.S. natural gas, storage is in the bottom of the 5-year average based on Days of Demand.

For the 13 weeks ending July 19, ngas storage build have been lower than the 5-year average 12 of 13 weeks by a total of 199 Bcf. That tells me that the current supply/demand is tight. The problem is that we have plenty of ngas in storage so there is no shortage as of today. However, if this trend continues the "tightness" will get more attention.

Bottomline: We are one normal winter away from much higher U.S. natural gas prices.

I have posted my updated forecast/valuation model for Range Resources (RRC) to the EPG website. RRC is currently on the "Sweet 16 bench". It is profitable, generating free cash flow even at today's low ngas prices and it has a lot of valuable leasehold in Appalachia if Raymond James' forecast of $4.00 ngas prices in 2025 turns out to be accurate.