A cold start to December gave way to a prompt warm-up, which will hold near-term gas futures that settled at $3.21/MMbtu.The winter outlook provided by the EIA predicts that this heating season’s inventories will be 6% above the 5-year average, barring any extreme weather conditions.

“Prices are historically low due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks”

Expectant: “Henry Hub natural gas price of $2.59 per million British thermal units (MMBtu) at year-end, compared to an average price of $1.44 per MMBtu through most of March…”

Source: Oilprice.com

Natural Gas: 12-month strip is down 17 cents from 3.07 to 2.90

Source: Nick Gerome, CTA

As fears of a global recession resurface, the energy markets remain elevated. The Bank of England followed the US and Japan by implementing another interest rate hike, the highest level since 2008.

Source: Nick Gerome, CTA

Because of the banking crisis, oil prices increased, which pushed OPEC to announce plans of cutting production by 1Million barrels/day.

Source: Nick Gerome, CTA

Early February started with the devasting 7.8 magnitude earthquake that struck Turkey and Syria. The disaster caused oil flows to stop in the region as well as reduced outflows to the Mediterranean coast.

Source: Nick Gerome, CTA

As seen in our last market update from December, NG prices are now down 33% (from 12/19/22).

Source: Nick Gerome, CTA

Weather pushes NG prices down as the US expects a warm winter. “Natural gas prices in Europe have now come down to levels previously seen before the Russia-Ukraine war.”

Source: https://seekingalpha.com/news/3920951-slumping-natural-gas-prices-point-to-warm-winter-in-us-and-europ

Causes for Rally:

• Russia stopping gas flow
• Cold winter with not enough output

What this means for the US – pressure on gas prices as higher-than-normal European export demand is expected to continue, while domestic supplies remain below the 5-year average.

Sources: Nick Gerome, CTA, Taurus Advisory Group & www.reuters.com

Market Impactors:

• Russia conflict with Ukraine
• Lack of fuel sources
• Interest rate increase
• Bounce back from COVID

How to combat – Lock in non-commodity energy components with future heading plans to capture market dips

As we can still see an upward trend in power prices, there is a downward trend in national REC pricing

• The Power Move blog article- https://etekenergy.com/market-update-natural-gas-fired-generation-on-the-decline/

Sources: U.S. Energy Information Administration, Nick Gerome, CTA, Taurus Advisory Group

• The Power Move blog article- https://etekenergy.com/a-managed-approach-to-energy-buying/

Source: Direct Energy

• The Power Move blog article- https://etekenergy.com/august-energy-briefing-natural-gas-on-the-rise/

Mild winters coupled with COVID-19 push the energy market to lows last seen in 2015-2016. NYMEX 12-month strips are currently averaging $2.07/MMBtu, while the past 5 years has averaged $2.80/MMBtu.

Links:

• The Power Move blog article- https://etekenergy.com/market-update-new-year-new-energy-market/