April Is Now The Prompt Month

April Is Now The Prompt Month

THE One Minute Energy Update for 2/28/24

***#NYMEXUp #PG&EBasisDown #SoCalGasBasisDown #WeatherGood #CarbonOffsetsCheap!! ***

***NYMEX ****– April ’24 is now the prompt month. There is an uptick in indicative pricing because of the change in the prompt month. NYMEX is still cheap and should be purchased before the summer heat comes into focus. *

***NYMEX pricing so far today - ****Open = $1.81, High = $1.88, Low = $1.78, Current = $1.86. NYMEX prices are up approximately $0.10 from 1 week ago and down approximately $1.00 from 1 year ago. *

NYMEX CALENDAR YEAR ESTIMATES* – 2024 = $2.42, 2025 = $3.44, 2026 = $3.76.*

2023 NYMEX Monthly average = $2.73. 2022 NYMEX Monthly average = $6.64. 2021 NYMEX Monthly average = $3.84. We remain well below the last 3-year averages at a 40+ month low.

*We are below the 50-day ($2.30), and above the 20-day ($1.77) and the 9-day ($1.65) average. *

RESISTANCE* – Starting @ 1.72/$1.82. *

THE PIVOT* @ $1.71.*

SUPPORT* - Starting @ $1.68/$1.63. *

BASIS* – Both PG&E and SoCal Basis prices are down again today for day ahead pricing. Forward months are also down. In my opinion, once we get into March, we could see further downward pressure, but it won’t last forever. Summer heat will be the focus before we know it. *

*The 2023 PG&E CG First of the Month Index averaged $9.83. The 2023 SoCal CG First of the Month Index averaged $10.95. The 2023 SoCal Border First of the Month Index averaged $8.14. We remain WELL BELOW the last 3-year averages. *

***LNG ****– LNG demand is expected to increase by 50% by 2033. LNG exports from the US are expected to triple in that timeframe. Pair that with projected natural gas demand from Mexico also tripling in the same timeframe. In total, that’s a projected increase from 20Bcf/D to 60Bcf/D. pretty bullish, in my opinion. *

PRODUCTION/SUPPLY & DEMAND* –**** ****Today’s Est. Supply = 106.8Bcf/D. Supply 7 Day Avg. = 108.55Bcf. Today’s Estimated Production = 100.3Bcf/D. *

Latest Demand 7 Day Avg. from 2-22-24 = 124.24Bcf/D. Today’s expected demand = 100.8Bcf. That’s down 15Bcf from this time last year.

***RIG COUNT ****– As of 2-23-24 - Oil is up 6 for a total of 503 active rigs. Natural gas fell by 1 for a total of 120 active rigs. Miscellaneous rigs count is 3. We are down 127 overall from 1 year ago. *

WEATHER* – NG Weather has this to say for 2-28-24 – 3-2-24, “Weather systems will impact the West w/rain, snow, and mild to cool highs of 30s to 50s. A frosty weather system will sweep across the central US today w/rain, snow, and lows of -0s to 20s, including 20s into N. Texas for a modest bump in national demand, then tracking across the Great Lakes & Northeast Thursday. Much of the US will warm back above normal Fri-Tue w/highs of 50s-80s besides the cool and unsettled West. Overall, moderate demand Wed-Thu, then back to light/very light.”*6 – 10-day forecast = pick ‘em. 10-15-day forecast = bearish. 3-month forecast = bearish. Summer forecast = bullish.

STORAGE* – As of 11 days ago, storage was 22% above the 5-year average for this time of year. Let’s not forget that Injection Season isn’t that far off. We are 451 above the 5-yer average of 2,019Bcf. At 2,470Bcf, total working gas is above the 5-year average. The next storage report is 2-29-24. The latest forecast is for an 89Bcf withdrawal. Compare this to 73Bcf last year at this time and the 5-year average for this week of 143Bcf. *

CRUDE – C*urrent price = $79.09. Forward estimates: 2024 = $76.34, 2025 = $1.21, 2026 = $67.88. *****

CA RETAIL POWER* – CAISO stays just above $33MWH. Lowest MWH prices in some time. So, the cost to produce power is falling but distribution costs are increasing (see graph below). As people sprawl further and further away from developed/established areas, and new development takes place, distribution prices will most likely increase further. Don’t worry, the utility companies are very good at spreading that increasing cost across the board to all rate payers. Lucky us….*

***CARBON OFFSETS – ***We’re going to see a lot of carbon offsets coming out of Africa as their government finally gets serious about implementing “clean cooking” mandates/projects. If you’re looking to buy carbon offsets, our menu of carbon offsets continues to grow as we add more and more supply partners. Most companies will be mandated to curb their carbon footprint. SOME carbon offsets may be the easiest, cheapest, and most effective way to do so.

***THE BOTTOM LINE – I’m sticking with yesterday’s bottom line, so it sinks in - ****The downturn in production is bullish. Don’t think that it isn’t. Right now, the mild winter experienced paired with significant storage has bears pushing those bulls back. What happens if we get a summer well above normal in terms of temperatures and demand. NYMEX is at a record low, more than we would think. We’re seeing the lowest prices since 1995 but adjust for inflation and the 1995 prices would be closer to $3.00 rather than the $1.60 prices we’re seeing on the prompt month.*****Let’s lock up NYMEX and then we pick up Basis as it falls. No market lasts forever, and this bear market will not last forever.

**Indicative Fixed Prices out of April ’24 **

PG&E CG SOCAL CG SoCal Border (+ $0.51 BTS)

1 MONTH $3.29 $3.66 $3.17

3 MONTHS $3.29 $3.87 $3.42

6 MONTHS $3.70 $4.69 $4.35

Winter Strip (Nov ’24 – Feb ’25)

$6.45 $7.45 $6.99

12 MONTHS $4.75 $5.60 $5.25

24 MONTHS $5.05 $5.85 $5.45

Summer Strip (April ’24 – Aug ‘24)

$3.57 $4.55 $4.10