THE NATURAL GAS MARKET CONTINUES TO BOUNCE ALONG THE FLOOR NEAR $2.50
A STRONG EASTERN RIDGE OF WARM AIR KEEPS DEMAND DOWN.
- Cold fronts continue to move in from the west but break apart when they hit a robust eastern ridge of warmer air, keeping demand down in the more populated cities.
- Even the threat of colder air in the last week of February is mitigated by the warmer weather typically due in March.
- Production rose to 102 bcf/d last week. Producers may reduce production costs due to robust storage and lower market pricing.
- A ship is now docked at their LNG facility. They have been approved by the FERC to load at their docks but are not approved to start the LNG process.
NATURAL GAS STORAGE REPORT
- The Freeport LNG Facility has been approved for docking operations, and an LNG tanker has docked at the facility. However, Freeport has NOT been approved to begin LNG processing yet. The ship at Freeport may just be loading up on what was left in the tanks before the fire last June.
- The market for the next 12 months has dropped by about $3.00 in the last 12 months. What had been priced at @$7.00 in January 2022 was now @$4.00 in January 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 look at cutting production back from the near-record level, as they have been at around 102 Bcf/d. More robust storage surpluses and lower market prices have kept pricing below $3.00
THE US REMAINS COLDER IN THE WEST, WARMER IN THE EAST
The natural gas market continues to bounce near $2.50 thanks to warmer weather in the East and substantial production numbers. A warm ridge in the Eastern US has kept demand down in some of the most populated cities.
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