Energy Market Newsletter: December 23, 2024
Weather Demand and Natural Gas Pricing
As we approach the end of the year, the energy market is experiencing significant shifts. While the recent cold spell is easing, forecasts for a colder-than-expected early January have pushed gas prices up to $4.00. This marks the second cold winter shot, and further bullish gas news could drive higher prices.
The impact of weather on natural gas pricing is twofold:
- Demand: Colder temperatures naturally increase demand for heating.
- Supply: Severe cold can cause freeze-offs at drilling sites, reducing production just as demand spikes.
6-10 & 8-14 Day Temperature Forecasts
Natural Gas Storage Report
LNG Exports and Global Market Dynamics
LNG exports have reached an impressive 14.9 Bcf, nearly matching the record set in January 2024. However, recent developments in the global market suggest potential changes:
- UK and European gas prices dropped by almost $3.00 last week.
- This price drop may lead to a temporary easing of LNG exports.
- Lower overseas prices could result in more gas remaining in the domestic supply.
Strategic Outlook for 2025 and Beyond
With the release of updated forecasts for 2025 pricing, we recommend the following strategy:
- Opt for variable products for both gas and electricity in the short term.
- Expect an upward trend in pricing for 2025.
- From 2026-2030, pricing is projected to decrease.
To capitalize on this trend:
- Avoid fixing contracts at higher prices with premiums for market volatility.
- After 2025, consider a NYMEX+ strategy for gas or a block and index strategy for electricity to benefit from the anticipated market downturn.
Natural Gas Production Report
NYMEX 12-Month Strip
NYMEX Rolling Prompt Month
