EIA PROJECTS ABOVE $8.00 PER MMBTU FOR THE 2ND HALF OF 2022
PRICES WILL HURT UNTIL SPRING 2023.
- The EIA is projecting that average pricing will be $7.83 in 2Q 2022 and will average $8.59 in the second half of 2022
- Pricing in 2023 will average $4.74 once production begins to catch up to demand.
- The cause of this high average is the supply shortage coming out of Winter 2021-22. We are currently 16% below the five-year average and will likely be almost 10% below the five-year average next winter.
- A scorching hot summer will send these rates even higher.
NATURAL GAS STORAGE REPORT
Natural Gas News:
NYMEX NATURAL GAS ANALYTICS
- The EIA is projecting pricing in Q2 at $7.83. And in the second half of 2022, Natural Gas is projected to be at $8.59 before falling to an average of $4.74 in 2023. The cliff is near April 2023. For clients using Natural Gas as heat load and are on a NYMEX contract, pricing will be awful come Winter 2022. TPI recommends they switch agreements to fixed around October to blend into lower 2023 pricing.
- Worries of an escalation in the Ukraine War by Russia did not materialize last week. Still, fears among European countries remain high, and a Natural Gas and Oil Embargo is inching ever closer.
- The rig count has increased by half over the past year, but production is still below the record high of 95 Bcf/d in 2019. We may top that soon as spring maintenance is almost complete. LNG exports continue to eat up an increasing percentage of production, keeping domestic prices higher.
COOLING DEMAND MAY GET SOME RELIEF.
We may catch a break over the next two weeks as the scorching hot temps in the South begin to recede just a bit. The Atlantic Seaboard will see temperatures in the ’60s and 70s, while the South will cool just a bit, going from the 90s to the 80s.
