Natural Gas: EIA WEEKLY NATURAL GAS STORAGE REPORT
Keep an eye on the gas storage report.
While we still have a surplus of natural gas compared to the five-year average, especially last year, the recent injections have been smaller than in the past, and the surplus is shrinking. This is a sign that demand continues to increase, mainly thanks to the extreme heat, and that production has not risen to keep up with demand.
NATURAL GAS PRICING AT AN 18-MONTH LOW
- If you are waiting / gambling on the market to drop to pre-pandemic levels, you are playing a losing hand.
- Production is forecast to retreat in the coming month
- Freeport is back online, and more LNG export facilities are under construction.
- You cannot rely on another record-breaking mild winter.
- Not a single market fundamental points to a lower market price in the future.
WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK
- July broke all records for the hottest month in Earth’s recorded history. This record heat was .6 degrees Fahrenheit hotter than the previous record. This increase is likely not a once-in-a-hundred- or 1,000-year event, as the previous record was broken in July 2019.
- As the climate warms, expect these records to fall more often. The heat will continue, especially in the South and Southwest, where Phoenix finally broke a streak of 31 straight days over 110 degrees.
FORWARD POWER PRICING
For a few weeks in July, the electricity market began to normalize, with future power prices dropping below the most current pricing. In the last week, that has switched back to future pricing being higher than in the near term.
This may reflect the forecast of higher exports and lower production v demand that may be inevitable.
