Summer Volatility Arrives!

Summer Volatility Arrives!


THE One Minute Energy Update for 6-4-24

Before we get started, here is an update (from one of our supply partners) on SoCal Edison’s Direct Access Lottery:

·  SCE has 1.3 billion KWh of DA cap space available.

·  Customers participating in the June lottery will be assigned their "sequence numbers" and MOST will likely receive offers for DA service in 2025, unless some large manufacturing plant is on the list, which appears to be unlikely. 

·  Customers should receive such 2025 DA offers "by no later than August 12.”

·  ALL CUSTOMERS RECEIVING SUCH DA OFFERS WILL BE AFFORDED THE 15-BUSINESS-DAY ACCEPT/DECLINE PERIOD.

 THE BOTTOM LINE ON DIRECT ACCESS LOTTERY - Customers participating in the June lottery should be prepared to make a quick decision in mid to late August as to whether they want to accept an offer for DA service beginning in Jan 2025.  So, if any SoCal based power end users were thinking about entering the lottery, your chance of receiving DA is better than it has been in the previous Direct Access lotteries. 

 

#NYMEXDown     #PG&EBasisUp     #SoCalBasisUp    #WeatherBullish     #CarbonOffsets    

NYMEX Pricing So Far Today - Open = $2.77, High = $2.82, Low = $2.66, Current = $2.67.  NYMEX prices are up approximately $0.15 from 1 week ago.   

NYMEX CALENDAR YEAR ESTIMATES – 2024 = $3.00, 2025 = $3.52, 2026 = $3.85.

2024 NYMEX Monthly Average (so far this year) = $1.98.  2023 NYMEX Monthly average = $2.73.  2022 NYMEX Monthly average = $6.64.  2021 NYMEX Monthly average = $3.84. 

We are above the 50-day ($2.09), the 20-day ($2.52) and the 9-day ($2.64) average.  

RESISTANCE – Starting @ $2.82/$2.89. 

THE PIVOT @ $2.72. 

SUPPORT - Starting @ $2.65/$2.55.

BASIS – Both PG&E CG Basis and SoCal CG Basis prices are up today due to the excessive heat away from the coast in the Golden State.  It should correct downward once the heat blows out.  Even though it’s up, it’s still far cheaper than it was this time last year and the previous year.                      

The 2023 PG&E CG First of the Month Index averaged $9.83. 2024 averaging $3.51 through May ’24. 

The 2023 SoCal CG First of the Month Index averaged $10.95.  2024 averaging $3.29 through May ’24. 

The 2023 SoCal Border First of the Month Index averaged $8.14.  2024 averaging $2.65 through May ’24. 

LNG EXPORTS, NG EXPORTS, NG IMPORTS – LNG Exports = 12.8Bcf/D.  Mexico Exports = 6.9Bcf.  Canadian Imports = 5.4Bcf.

PRODUCTION/SUPPLY & DEMAND THIS WEEK – Today’s Est. Supply = 104.8Bcf.  Supply 7 Day Avg. = 105.98Bcf.  Today’s Est. Production = 100.1Bcf.  Today’s Est. Demand = 94.2Bcf.  Latest Demand 7 Day Avg. = 93.72Bcf.  This week’s demand moves from low to high for the remainder of the week. 

RIG COUNT – The latest rig counts = still at 600.  The oil rig count falls by 1 with a total of 496 active rigs. The natural gas rig count increases by 1 for a total of 100 active rigs.  The miscellaneous rig count is unchanged at 4 active rigs.  We are down 96 active rigs compared to this time last year.

STORAGE – This week’s storage report is estimated to be an injection of 39Bcf.  We are currently 380Bcf above this time last year and 586Bcf above the 5-year average of 2,209Bcf.  At 2,795Bcf, we are above the 5-year historical range.  The latest Storage projections are 3.87Tcf by Oct ’24 and 1.73Tcf for March ’25. 

WEATHER – NatGasWeather has this to say, “Most of the US will be near to warmer than normal through Thursday w/highs of upper 70s and 80s from the Midwest to the Northeast, and upper 80s and 90s over the rest of the US besides locally hotter 100s California to Texas and cooler mid-50s-60s across the showery Northwest. A hot upper ridge will build over the western ½ of the US late in the week, while weather systems cool the eastern ½ of the US into the 60s-80s.”

5 – 10-day forecast = bearish.  10-15-day forecast = bearish.  3-month forecast = bullish.  Summer (July – Sep) forecast = bullish.    

***CRUDE –***Down.  Current price = $74.26.  Forward estimates: 2024 = $73.60, 2025 = $71.03, 2026 = $68.31.   

CA RETAIL POWER – CAISO pricing moves up to just over $14 per MWH. 

CARBON OFFSETS – California and other states will be mandating companies buy carbon offsets, starting as early as 2025.  Is your company ready for that mandate?  Better to get ahead of the 2025 demand – more options, greater price range.  We can help. 

THE BOTTOM LINE – Severe heat for inland CA, the SW, and into Texas will be intense for the next few days before cooling dramatically.  Below normal demand in other parts of the US balance out the increased demand in the West/SW/Texas. 

                         Indicative Fixed Prices out of July ’24                              

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

1 MONTH            $3.60          $4.05             $3.65

3 MONTHS          $3.85          $4.60             $4.20

6 MONTHS         $4.70           $5.30             $4.95

12 MONTHS        $4.95          $5.45             $4.86
24 MONTHS       $5.23          $5.95             $5.60

Summer Strip (July ’24 – Oct ‘24)

$3.85           $4.40            $4.00

Winter Strip (Nov ’24 – Feb ’25)

$5.75           $6.20          $5.75