No more winter, EIA withdrawal, and LNG being #1.
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The week-over-week comparisons on DA LMP pricing are truly amazing. If we didn’t know better and only looked at pricing, it’d be fair to assume we had gone from a once-a-generation cold snap to the second week in May. The move down in natural gas has been nothing short of shocking. While everyone knew withdrawal would be significant, even a number north of that couldn’t stop the off-the-cliff move in gas. Warm weather outlooks and increased gas production seem to be driving gas lower, but this move must include some speculative money being on the wrong side. We would caution as it’s the first week of January, that there’s a whole lot of winter left.
A long-term theme in natural gas has been that eventually it trades on a world market like oil. We’ve written about NEISO pointing out how their gas market is more tied to the European LNG market. Well, this week it was announced that the US has now tied Qatar as the world’s largest exporter of LNG. Stay tuned as this theme becomes more of a reality.
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