WEATHER INSIGHTS
Overall, the week starts with moderate demand, potentially decreasing midweek but then likely increasing towards the end of the week due to the forecasted snow. This variable weather pattern could lead to fluctuations in natural gas demand throughout the week, with a possible spike in consumption during the latter part of the week.
Supply and Demand Dynamics
Supply Outlook
- Production remains high at 104.4 Bcf/d despite the recent polar vortex.
- Permian Basin largely unaffected by wellhead freeze-offs
- The current supply is below the five-year average and last year’s levels.
- Market rising on expectations of continued deficit
- Long-term prices expected to drop as new supply comes online in 3-5 years
NATURAL GAS STORAGE REPORT
Demand Trends
- Exceptionally high demand in recent months has erased the surplus
- Warmer weather forecast for next 10-14 days may ease demand
- High winter demand led to price increases
- Concerns about potential hot summer impacting supply rebuild
NATURAL GAS PRODUCTION REPORT
NYMEX STRIPS
Price Movements
- Prices climbed to over $17.00 per Bcf before falling sharply
- Current pricing is around $15.00 per Bcf
- LNG exports decreased to approximately 14 Bcf/d
NYMEX ROLLING PROMPT MONTH
Strategic Recommendations
- Eliminate premiums and fixed pricing to reduce unnecessary costs.
- Consider a variable pricing strategy.
- Explore longer-term block-and-index strategies to benefit from potential price decreases.
- For managed products:
- Consider locking on-peak hours for summer.
- Evaluate 25-50% hedge for next winter.
Market Outlook
- Prices for 2026 are predicted to be higher, supporting the current market rise.
- Expectations of increased supply in coming years may lead to lower long-term prices.
Stay informed and work closely with your energy advisor to optimize your natural gas procurement strategy in this dynamic market environment.
