Natural Gas Supply Highlights
- Positive Storage Injections: Over the past two weeks, storage levels have seen positive injections, with last week recording a +39 Bcf increase. This is a step in the right direction for addressing the supply deficit.
- Cooler Summer Forecast: Meteorologists predict this summer to be the 13th hottest on record, a significant shift compared to the first and second hottest summers experienced in two of the last three years. A cooler summer could reduce energy demand, potentially easing pressure on supply levels.
- Pricing Trends: Despite these improvements, supply remains below last year’s five-year average. Natural gas prices are hovering slightly above $4.00/MMBtu.
NATURAL GAS PRICING REMAINS NEAR $4.00
EIA: Natural Gas Storage Report
Demand Insights
- Persistent Price Resistance: Spring typically sees favorable pricing conditions; however, the current supply deficit is preventing prices from dropping below $4.00/MMBtu.
- LNG Export Dynamics: LNG exports remain robust, just 1.63 Bcf/day below current capacity. With new LNG facilities expected to come online in the next few years, demand from Europe and Asia will likely grow, further tightening domestic supply and sustaining higher prices.
- Global Storage Concerns: Europe’s storage levels are significantly lower than two years ago, driving international demand for U.S. LNG exports and contributing to upward pressure on domestic prices.
Weekly Weather Outlook
West & North: Expect rain and snow as weather systems move through the western and northern U.S., with temperatures ranging from the 30s to 60s.
- South & East: Mild to warm conditions will dominate most of the week, with highs ranging from the mid-50s to 80s. However, a late-season cool front will bring cooler temperatures by the weekend and early next week.
- National Energy Demand: Moderate overall, occasionally dipping to low levels due to the milder temperatures across the country.
NATURAL GAS PRODUCTION REPORT
Actionable Recommendations
If you’re navigating energy procurement decisions, consider these strategies:
- Long-Term Agreements: For smaller accounts not using managed products, locking in longer-term agreements can provide stability and lower rates. Opt for pass-through capacity to minimize premiums.
- Managed Index Products: Reduce or eliminate premiums by passing through energy and capacity costs wherever possible. Work with an energy consultant to identify hedging opportunities during market dips.
- Seasonal Hedging Opportunities: Monitor market trends in April and May to lock in part of next winter’s supply (e.g., 25–50%) or secure on-peak hours during summer months when demand spikes.
Looking Ahead
As we move into Spring:
- Expect natural gas prices to remain volatile as traders assess storage injection rates and summer demand forecasts.
- Monitor LNG export trends and upcoming facility expansions that could impact domestic supply availability.