Natural Gas Market Continues to Dominate Headlines!
WEATHER: COLD FRONT PUSHING THROUGH GREAT PLAINS AND UPPER MIDWEST
With the onset of Winter Storm Olive, the gas and electricity markets have slightly increased, with Natural Gas moving above $2.50.
This will likely continue for the next few days unless the system moves north or breaks apart. This storm has increased demand along the West Coast, especially in Los Angeles, which saw snow for the first time since 2019.
GAS RISES AT THE END OF THE WEEK, NOW ABOVE $2.50
A STRONG COLD FRONT BRINGS HIGHER DEMAND.
- Despite increasingly good storage numbers, the market rose on colder forecasts at the end of the week and a Winter Storm Olive that brought snow to the Los Angeles area and is now moving eastward.
- Freeport has finally been approved for dock operations, and three ships have docked there to take on inventory that was leftover before the explosion on June 8th.
- Freeport is also taking in natural gas through pipelines but is not yet approved to start processing that into LNG.
NATURAL GAS STORAGE REPORT
•The increase in natural gas pricing came even though solid storage numbers were reported Thursday. Last week’s -71 Withdrawal was much weaker than last year’s. As a result, we are now 21.9% above last year in gas storage and 15.2% above the five-year average.
•The market in the last nine months has dropped by almost $6.00. What had been priced at $9.04 in mid-June 2022 is now $2.26 in February 2023. This difference in market forecasts begins to narrow next year. The “new normal” next year looks to be about $4.00 except in winter, when it will generally rise to $5.00
•Producers may consider cutting production back from the near-record level, as they have been at around 102 Bcf/d. Freeport is also expected to get approval for LNG processing and will begin exporting new inventory, likely by the end of April or May.
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