WEATHER: 6-10 & 8-14 DAY TEMPERATURES
Weather and Demand
Warmer temperatures are expected to sweep across the Eastern half of the United States this week, potentially easing the high energy demand we’ve been experiencing.
The most recent Natural Gas storage report revealed a drop in production below 100 Bcf, likely due to wellhead freeze-offs that temporarily halted operations. While the upcoming report may reflect similar figures, production is anticipated to rebound above 100 Bcf/d in the following week.
Supply and Pricing
Despite a substantial withdrawal of 223 Bcf in the latest report, this figure fell short of the projected 258 Bcf, contributing to market prices dipping below $4.00. Although pricing briefly surpassed $4.00 last week, forecasts of warmer air moving in from the west over the next two weeks have pushed prompt-month pricing down to $3.78. Meanwhile, in March, pricing decreased to just over $3.30 per MMBtu.
NATURAL GAS STORAGE REPORT
LNG Demand
LNG exports have reached a 12-month high, bolstered by shipments from the Plaquemines facility. This surge is partly attributed to cold weather conditions in Europe and the UK.
Strategic Recommendations
- Eliminate premiums and fixed pricing: This should be your primary objective to reduce unnecessary costs.
- Implement variable strategies: Opt for variable pricing models where possible.
- Consider managed products:
- Locking up on-peak hours for the upcoming summer
- Implementing a small 25-50% hedge for next winter
NATURAL GAS PRODUCTION REPORT
NYMEX 12-MONTH STRIP
