NATURAL GAS CONTINUES TO BE PRICED BELOW FUTURE YEARS
- The current year continues to be priced lower than future years, and the spread is beginning to widen as 2027 is trending higher than 2024-2026
- Freeport is now ramping up exports. The facility is now approved for processing natural gas received via pipeline into liquid natural gas for shipment overseas.
- More LNG facilities are scheduled for the U.S., including Golden Pass, TX, Plaquemines, LA, and an expansion of the facility in Corpus Christi, TX. In addition, the Rio Grande in Texas, Lake Charles in Louisiana, and Port Arthur in Texas are all expected to be approved. All six of these should be complete by 2030.
What Is Henry Hub?
Henry Hub is a natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York Mercantile Exchange (NYMEX).
NATURAL GAS STORAGE REPORT
The Freeport facility has final approval to process liquid natural gas (LNG) for shipment overseas. Expect more LNG facilities to come online in the next two-to-five years, which could come close to doubling our export ability.
Unless we ramp up production to meet the increased exports, the domestic supply of natural gas will be well short of what is needed, and prices will rise accordingly.
Electricity: FirstEnergy Rates To Double
First Energy announced the results of their final three auctions. The last auction had five winning bidders and settled at $83.75.
So along with the October 2022 auction at 122.20 and January’s auction at $99.77, the final rate for June 2023 through May 2024 will be $10.2 per kWh. Almost double what it had been.
ELECTRICITY HEADLINES
Electricity in the PJM ADHub and the PJM West Hub are at their lowest pricing since October 2021. Pricing is likely to dip a bit in the coming weeks, but the last ten summers have been the ten hottest summers on record, and there is no reason to think that will change this year.
As a result, the cooling demand for electricity will be high.
HISTORICAL FORWARD POWER PRICING
6-10 DAY AND 8-14 DAY NOAA TEMPERATURE OUTLOOK
Weather for the next two weeks appears to show above-normal temperatures in the east and near-normal to just below-normal temperatures in the west, moving into the Great Lakes region.
