TPI Efficiency Energy Desk Newsletter > Natural Gas and Energy MarketvNews
NATURAL GAS SUPPLY
- The weekly natural gas injection came in at just +16 Bcf, initially pushing prices upward. However, ongoing market fundamentals and concerns about a potential demand reduction—stemming from economic uncertainty—quickly reversed this trend, with prompt month pricing settling at $3.17 by week’s end.
- Earlier projections suggested pricing would remain above $3.00, but upcoming economic data (notably the April 30 GDP announcement) or additional tariff news could push prices below this threshold.
- WTI crude oil prices appear stable at $62.00 per barrel for now. However, OPEC’s plan to increase production by 137,000 barrels per day could drive prices down toward $50.00 per barrel. If this happens, expect U.S. producers to scale back, which would also reduce associated natural gas output.
AD HUB FORWARD POWER PRICING
NATURAL GAS DEMAND
- Total natural gas demand—including industrial, residential/commercial, power generation, and LNG exports—remains well above the five-year average. Despite this, natural gas prices continue to slide due to fears of recession.
- U.S. LNG export facilities are operating near full capacity, exporting over 16 Bcf daily. While a new tariff war could impact imports, European gas storage levels are currently below 40%, suggesting U.S. exports will likely remain strong in the near term.
NYMEX 12-MONTH STRIP
ALL ABOUT THE NYMEX TWELVE-MONTH STRIP
• The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
• A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
• The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
• The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
• The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
• The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.
WHAT SHOULD YOU DO?
- If you are not using a managed product and have a smaller account, consider locking in longer-term agreements. The market has stabilized, and longer-term contracts are offering lower rates. Where possible, pass through capacity charges to minimize premiums.
- For those on managed index products, focus on reducing or eliminating premiums by passing through energy and capacity costs.
- Consult with a qualified energy advisor to identify hedging opportunities when prices dip. This current market downturn may present a chance to secure favorable energy blocks for the future.
Summary
The energy market continues to be shaped by a mix of supply fluctuations, economic signals, and international developments. Staying proactive and flexible with your procurement strategy—especially in times of volatility—will help you manage risk and capitalize on market opportunities.
Contact your TPI Efficiency consultant today for tailored advice or to discuss your specific situation.
NATURAL GAS EXPORTS LNG & MEXICO
Natural Gas Production Report: Chart Insights
The latest natural gas production report indicates the following key trends:
- Current Production: 105.5 Bcf/d
- Daily Change (D-o-D): -0.1 Bcf/d
- Weekly Change (W-o-W): -0.2 Bcf/d
- Monthly Change (M-o-M): -0.9 Bcf/d
- 30-Day Average: 105.6 Bcf/d
- Year-over-Year Change (Y-o-Y): +4.4 Bcf/d
What the Chart Shows
- Recent Decline: The chart shows a slight downward trend in daily, weekly, and monthly production, as indicated by the negative changes over these periods.
- Stability Near Average: Despite the recent small declines, production remains very close to the 30-day average, suggesting overall output stability.
- Long-Term Growth: The year-over-year increase of +4.4 Bcf/d highlights a strong upward trend in production compared to the same period last year.
- Current Level: Production is holding steady above 105 Bcf/d, historically high.
The chart reflects a robust natural gas production environment, with minor recent declines but continued strength compared to last year. This suggests producers maintain high output levels, even as short-term fluctuations occur.