Energy Perspective
Natural Gas Market
• Oppressive heat over the past week appears to be subsiding, with cooler forecasts in the Northeast, Midwest, and Great Lakes regions at the end of the month. Power generation demand for natural gas increased throughout the month of June, averaging 39.67 Bcf per day so far in June (vs. 38.99 Bcf/day in June 2023) and peaking at 45.21 Bcf on 6/21.
• International LNG prices have been rising across the globe, with the Japan-Korea benchmark spot trading at $12.47/MMBtu, a $9.73/MMBtu premium to the U.S. Henry Hub benchmark.
• Three new FERC commissioners were approved by the Senate, filling two empty seats and ensuring a replacement for a third that will be leaving at the end of this month. This is the first time in over a year that FERC will have a full set of commissioners.
• Crude oil rig counts continue to fall and now stand at 485 rigs, the lowest since December 2021, causing concern for the amount of associated gas growth to be expected from oil wells over the next year.
• After falling as low as 97.7 Bcf in late April, gas production in the U.S. has been on the rise, averaging 100.9 Bcf per day since 6/11/2024.
Weather
June 24, 2024
Electricity Market
• Four out of the seven hubs tracked in this publication lost strength this week.
• The biggest decrease occurred in N. Ill, which went down 9.13%, or $3.80, to $37.80.
• PJM-W was the next highest decrease (-8.53%), followed by ATSI (-8.41%), reaching $45.60 and $43.00, respectively.
• WCMA lost 4.50%, or $2.50, to reach $53.10.
• The biggest increase was in Houston, which went up 4.07%, or $2.70, to $69.05.
Petroleum Market
• Oil prices logged another weekly gain, closing above $80 on lower inventories and the potential for escalation in the Middle East. While prices closed down slightly on Friday, the new front-month WTI August futures contract gained for the week ending 6/21, closing at 80.73/barrel on Friday, up almost 3% for the week. Global benchmark Brent was up 1% to $85.24. In early trading Monday, WTI was near $81/Bbl.
• Prices had sold off following the OPEC+ June meeting around concerns of excess supply even though the group agreed to extend existing production cuts. The group indicated a phase-out of production cuts would begin later this year while retaining the option to delay or reverse increases subject to market conditions. Prices have stabilized near-term after falling near 2024 lows. WTI remains up over 12% year-to-date and Brent up 10%.
• Total U.S. crude stocks for the week ending 6/14 declined 2.2 million barrels to 828M. Commercial stocks, excluding SPR volumes, decreased 2.5M to 457.1M, supporting prices. Additions to the SPR continued with a 400K injection to 370.9M.
• U.S. crude oil production remained at 13.2M barrels last week after a 100K increase in the previous week. Production remains near record levels and 1M higher than the same period last year.