Energy Perspective
January 16, 2024
Natural Gas Market
Electricity Market
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• Six of the seven of the hubs tracked in this publication gained strength from the previous week.
The massive cold front currently covering most of the country unfortunately arrived over the holiday weekend, prompting a four day buy for spot gas. Nationwide spot gas pricing for flow on Friday averaged $3.30/MMBtu while the price for the four-day weekend averaged over 5x higher at $16.70/MMBtu.
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When EIA reports the storage withdrawal for this cold period next week, a massive withdrawal of over 300 Bcf is expected.
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But the forecast indicates a much warmer trend coming near the end of the month and futures are reacting today with the February prompt contract falling $0.38 so far and trading at $2.935/MMBtu this afternoon.
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The summer strip of Apr-Oct is also falling as well, trading at an average of $2.70/MMBtu, down $0.115 for the day.
Weather Temperature Probability
• WCMA was the hub to see the largest increase in pricing. It gained $2.25 per MWh or 4.42%. This brought its price up to $53.15. • ATSI saw the second largest increase in pricing. It gained $1.80 per MWh or 4.33%, which raised its price to $43.35. • N. Ill saw a 4.27% increase in pricing, gaining $1.60 per MWh. • ERCOT-S saw the smallest increase in price, gaining $1.00 per MWh or 1.88%. • SP-15 was the only hub to see a decrease in price. It lost $1.60 per MWh or 2.51%, which brought its price down to $62.05.
Petroleum Market Precipitation Probability
6-10 day outlook probability. Created 1/15/24 for the week 1/21/24–1/25/24. Source: www.noaa.gov
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Airstrikes on Houthi targets in Yemen by the U.S. and U.K. last week prompted transporters to avoid passing through the Red Sea, 17 of them oil and natural gas vessels. However, this regional escalation did little to WTI crude prices, which ended the week at $72.68/bbl, just slightly over where it began.
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The February WTI contract is currently trading at $72.17/barrel. However, transportation costs have spiked due to the risk, insurance premiums, and longer trip times.
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Rig counts for crude are at 499 rigs, down 2 for the week. They have been hovering around the 500 mark since late September.
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Commercial crude inventories rose by 1.3M barrels while the SPR rose by 0.6M barrels for the week ending 1/5 . Inventories now stand at 432.4M and 355M barrels respectively.
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Distillate fuel oil stocks rose again, this time by 6.5M barrels to 132.4M barrels for the week ending 1/5, placing it 14.7M barrels above levels a year ago and near the middle of the 5-year range.
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NY Harbor ULSD February futures rose slightly last week, closing at $2.669/gallon and trading at $2.652/gallon today intraday. The 12-month strip (Feb24-Jan25) price is averaging $2.49/gal.
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Refinery utilization remained high at 92.9% but should decline in the next 40-60 days as winter season maintenance kicks in.