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TPI Market Snapshot week of April 24 2023

Below is this week’s Market Snapshot / TPI Takeaway:

NATURAL GAS: HIGH PRODUCTION AND MILD WEATHER LEAD TO LOWER PRICES IN THE FUTURE.

chart Natural Gas 12-Month Pricing Strip
Natural Gas 12 Month Pricing Strip
  • While the 2023 natural gas continues to trade lower than in 2024, 2025, and 2026. all four years have seen drops in pricing over the last two weeks due to mild weather and good storage numbers.
  • FirstEnergy released the official rates that include capacity, and the new rates will come in just above $0.12 per kWh when capacity and other charges are added. This will more than double the previous rate.

EIA WEEKLY NATURAL GAS STORAGE REPORT

EIA NATURAL GAS STORAGE REPORT
EIA NATURAL GAS STORAGE REPORT

CHART: THE DIFFERENCE THE FREEPORT OUTAGE HAS MEANT TO STORAGE

CHART:THE DIFFERENCE THE FREEPORT OUTAGE HAS MEANT TO STORAGE
  • 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 2-5 years, which could come close to doubling our export ability. 
  • The difference the Freeport shutdown has made in pricing can not be understated. When the explosion at Freeport occurred on June 8, 2022, gas storage was 340 Bcf BELOW the 5-year average, and gas pricing was closer to $8.00. The 24-month strip is closer to $3.00, and storage levels are 329 Bcf ABOVE the 5-year average. Even with the mild winter, if Freeport had remained online, we would see storage levels likely 200 Bcf below the 5-year average.

Weather: 6-10 DAY AND 8-14 DAY OUTLOOK

US Weather Map: 6-10 DAY AND 8-14 DAY OUTLOOK
US Weather Map 6 10 DAY AND 8 14 DAY OUTLOOK
  • While temperatures are cooler than average in much of the country for this time of year, the normal is becoming milder, leading to a decline in demand from industrial, commercial, residential, and power burn.
  • This week’s weather pattern has several weather systems that impact the US with showers and thunderstorms. In addition, the Northern US will see lows in the 30-to-40-degree range, with frost warnings in the Great Lakes regions. 
  • The southern US will see comfortable temperatures with areas of showers and highs between 60 and 80, creating a lighter-than-average demand. A reinforcing cold front will follow across the central and eastern US in the first few days of May to keep slightly more robust than average national demand on the natural gas market.  

Electricity News

  • FirstEnergy announced the results of their final three auctions. The final auction had five winning bidders and settled at $83.75. 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 just over $0.12 per kWh once capacity is included.
  • Electricity pricing continues to be more expensive the further out you go. For example, since the beginning of March 2027, pricing in the BGE Hub and the AD Hub has increased by approximately $10.00 per MWh. This may reflect the increasing number of LNG facilities scheduled to open from 2024-2027, which will raise the price of Natural Gas, a key component in electricity generation.

PJM BGE HUB FORWARD POWER PRICING

PJM BGE HUB FORWARD POWER PRICING

PJM ADHUB HUB ON-PEAK ELECTRICITY 2023

PJM ADHUB HUB ON PEAK ELECTRICITY 2023