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High Natural Gas Production:

High production, mild winter weather, and its effect on demand have been the main drivers of Natural Gas and electricity pricing. We continue to see warmer-than-normal temperatures throughout the country and lower overall demand for natural gas than we did in 2022. We are approaching the market over the five-year average in 2021 despite yearly highs in Liquid Natural Gas exports, which make up part of demand.

Most of this comes from record Natural Gas production at levels over 105 Bcf a year. We also see record oil production, which has increased our associated natural gas production, a by-product of oil drilling. This increase in production is despite little change in the number of dry gas well rigs online in the U.S.

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


Dec 19-25: The Great Lakes and East will see the departure of a weather system, ending rain and snow. However, temperatures will remain cool, with highs ranging from the upper 20s to 40s. Meanwhile, a milder system will persist over the West Coast, bringing continued rain and snow. The rest of the country can expect dry and favorable conditions, with highs ranging from the 40s to 70s.

A high-pressure system will strengthen from Thursday to Monday, leading to warmer-than-normal temperatures across nearly the entire United States. In the northern U.S., highs will reach the upper 30s to 50s, while the southern U.S. will experience temperatures in the 50s to 70s. Overall, there will be light to very light national demand for the next seven days.

EIA: WEEKLY NATURAL GAS STORAGE


Last week’s withdrawal was right on target with expectations, marking little change in the market. Natural Gas pricing for January continues to cycle downwards, affecting the rest of 2024. We do not see pricing above $3.00 until November of 2024, making this an excellent time to get your Natural Gas and electricity agreements in place.

FORWARD POWER PRICING

Electricity pricing has fallen sharply over the last month and a half. Both the BGE Hub in Maryland and the A.D. Hub in Ohio have seen Forward power pricing drop $6.00 since early November, almost 11% in Maryland and 13% in Ohio.

WHAT IS FORWARD POWER PRICING?

Forward power pricing is a financial mechanism used in the energy industry, particularly in the electricity market. It involves the pricing and trading of electricity for future delivery at a predetermined price. This mechanism allows electricity producers, consumers, and traders to hedge against price fluctuations in the electricity market and manage their risk exposure.

NATURAL GAS DEMAND

NYMEX 12 MONTH PRICING 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.