Natural Gas, 2022 FERC Market Review, and Banking.
Energy Market Update Week 12, brought to you by Acumen.For More Updates Like This, Subscribe Here!
This week's EIA natural gas storage report was a yawner. The withdrawal of 72 Bcf versus estimates of 74 Bcf was enough to move an already depressed market to almost zero as front month NYMEX remains in the low $2 area. Inventories are now 36% higher than last year and 23% higher than the five-year average. Storage levels were trailing in both the prior year and the five-year average back in January. This catch up has been primarily a result of lower draw downs in what has become a tame winter. Frankly, for the time being, the market is more concerned with production levels which appear to still be robust.
One bullish data point for domestic natural gas was supposed to be the Freeport coming back online and allowing some pent-up domestic gas to hit the world market. Currently, it appears there have been a few delays to that, and it might not matter that much anyway. As we noted last week, a strike in France has hampered offloading capabilities along with Europe’s storage profile looking like the US and has allowed for a more measured LNG delivery schedule. In short, Europe isn’t in a panic like last year.
Late last week, FERC released their 2022 State of the Markets report. A link to the report is available above. We aren’t going to comment on each slide, but they do a good job of pointing out some of the trends we’ve been commenting on. Perhaps the most interesting is the rising cost of interconnection in PJM, specifically the network upgrade.
Finally, at the risk of becoming a financial page, we can’t not touch on the banking mini crisis that continues to make headlines. The debate about the fallout for energy has started to pick up with a lot of varying opinions from market experts. Last week we mentioned the idea of credit rationing as banks slow down lending. We haven’t seen specific cases just yet, but there has been some discussion amongst producers admitting it is a concern. Should this play out, we would expect the production conversation we mentioned above to start to become more bullish for natural gas as production eases.
NOAA WEATHER FORECAST
DAY-AHEAD LMP PRICING & SELECT FUTURES
DAILY RTO LOAD PROFILES
Not getting these updates delivered weekly into your inbox? Let's fix that, click the link below: