"Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/How-US-Shale-Is-Reducing-Its-Emissions.html

How U.S. Shale Is Reducing Its Emissions

By David Messler - Sep 19, 2022, 4:00 PM CDT

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Natural-Gas/The-Pullback-In-Natural-Gas-Has-Created-An-Opportunity.html

The Pullback In Natural Gas Has Created An Opportunity

By Alex Kimani - Sep 21, 2022, 7:00 PM CDT

• Natural gas has retreated from recent highs as European countries are reaching storage capacity levels.
• U.S. natural gas prices have hit a fresh six-week low, closing at $7.75/MMBtu on Monday.
• The current pullback in natural gas is seen as ‘cyclical’, but the energy commodity still enjoys structural tailwinds.

Join Our Community

 

U.S. natural gas prices have hit a fresh six-week low, closing at $7.75/MMBtu on Monday with the Wall Street Journal saying that the market has lost momentum due to U.S. production topping 100 Bcf/day for the first time ever. The odds are now that ample U.S. production will be enough to meet local demand in the final months before winter arrives. Prices are likely to remain depressed unless there’s a breakout of storm activity in the Gulf of Mexico which could disrupt production.

  Meanwhile, benchmark European gas prices have continued to fall, dropping nearly 9% on Monday to their lowest in two months thanks to  European energy markets improving due to a combination of successful policy action as well as a price-induced demand response. Indeed, Germany’s economic minister Robert Habeck has revealed that the country’s natural gas storage levels are nearing 90% thus giving it a chance of weathering the winter season. He has, however, warned that gas storage will likely be empty by the end of winter.

Naturally, natural gas and LNG stocks have lost some momentum alongside the commodity they track. For instance, the United States Natural Gas Fund, LP (NYSEARCA: LNG) is down 20.3% over the past 30 days but is still 108.9% up in the year-to-date. However, the structural tailwinds are likely to continue outweighing “cyclical headwinds” as Strategas Securities LLC partner and head of technical analysis Christopher Verrone told Bloomberg. Investors should, therefore, use the latest pullback in gas stocks as a buying opportunity. Here are some top picks.

 

• Cheniere Energy

 

Market Cap: 42.1B

YTD Returns: 64.0%      

Cheniere Energy, Inc. (NYSE: LNG) is an energy infrastructure company that primarily engages in the liquefied natural gas (LNG) related businesses in the United States. Cheniere is one of the few pure-play LNG companies in the United States; the company owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana; and the Corpus Christi LNG terminal near Corpus Christi, Texas. The company also owns Creole Trail pipeline, a 94-mile pipeline interconnecting the Sabine Pass LNG terminal with various interstate pipelines; and operates Corpus Christi pipeline, a 21.5-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with various interstate and intrastate natural gas pipelines. 

Related: Private Equity Scoops Up Oil And Gas Assets

Back in March, the DoE approved expanded permits for Cheniere Energy's Sabine Pass terminal in Louisiana and its Corpus Christi plant in Texas. The approvals allow the terminals to export the equivalent of 0.72 billion cubic feet of LNG per day to any country with which the United States does not have a free trade agreement, including all of Europe. Cheniere says the facilities already are making more gas than is covered by previous export permits.

 

•  EQT Corp.

 

 Market Cap: 13.6B

 YTD Returns: 78.0%     

EQT Corporation (NYSE: EQT) operates as a natural gas production company in the United States. The company produces natural gas, natural gas liquids (NGLs), including ethane, propane, isobutane, butane, and natural gasoline. 

As of December 31, 2021, EQT had 25.0 trillion cubic feet of proved natural gas, NGLs, and crude oil reserves across approximately 2.0 million gross acres, including 1.7 million gross acres in the Marcellus play. 

EQT Corp. has unveiled a plan centered on producing more liquified natural gas by dramatically increasing natural gas drilling in Appalachia and around the country's shale basins, as well as pipeline and export terminal capacity, which it said would not only boost United States energy security, but also help break the global reliance on coal and on countries like Russia and Iran.

 

• Ovintiv 

 

Market Cap: $12.6B

YTD Returns: 40.0%

Ovintiv Inc.(NYSE: OVV) is a Denver, Colorado-based energy company that, together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids.

The company’s principal assets include Permian in west Texas and Anadarko in west-central Oklahoma; and Montney in northeast British Columbia and northwest Alberta. Its other upstream assets comprise Bakken in North Dakota, and Uinta in central Utah; and Horn River in northeast British Columbia, and Wheatland in southern Alberta. 

Back in June, Mizuho upgraded OVV to $78 from $54 (good for nearly 60% upside to current price), citing improving tailwinds.

#4. Devon Energy Corp

      Market Cap: $43.2B

      YTD Returns: 47.8% BofA Analyst Doug Leggate has advised investors to focus on oil companies with potential to grow their free cash flows through consolidations or other cost reduction measures, naming Devon Energy (NYSE: DVN), Pioneer Natural Resources (NYSE: PXD), and EOG Resources (NYSE: EOG). 

Devon fits that playbook to a tee, and while Leggate issued his advice earlier in the year, the case for this is only growing stronger. 

DVN stock has been one of the best-performing energy stocks thanks to strong earnings and continuing cost discipline including a variable dividend structure.

Related: UAE Oil Giant Reportedly In Talks to Acquire Gunvor Trading

Following the merger with WPX Energy last year, the company announced fixed-plus-variable dividends, something that has gone down well with Wall Street. In the second quarter, Devon paid out up to 50% of free cash as a variable dividend, bringing the total dividend to $1.55 per share. The stable portion has been indifferent, currently yielding slightly more than 1%. But if the latest convertible payout is a sign of the future, shareholders could receive closer to 10% overall.

Some Wall Street analysts had earlier pointed to the potential for DVN to sport a dividend yield of as high as 8% by year-end. Devon has already exceeded that, and now sports a juicy 9.7% estimated forward dividend yield.

#5. Chesapeake Energy Corp.

      Market Cap: $12.4B

      YTD Returns: 65.8%

Commodity price hedging is a popular trading strategy frequently used by oil and gas producers as well as heavy consumers of energy commodities such as airlines to protect themselves against market fluctuations. During times of falling crude prices, oil and gas producers normally use a short hedge to lock in oil prices if they believe prices are likely to go even lower in the future. 

Unfortunately, hedging also means that these companies are unable to enjoy the benefits of rising gas prices and can in fact lead to hedging losses. However, some bold producers betting on a commodity rally hedge only minimally or not at all.

Tudor Pickering rates Chesapeake Energy (NYSE: CHK) a Buy, saying the company remains one of the few producers that remain relatively unhedged.

This might come off as an odd pick given Chesapeake’s history, but somehow makes sense at this point.

Widely regarded as a fracking pioneer and the king of unconventional drilling, Chesapeake Energy has been in dire straits after taking on too much debt and expanding too aggressively. For years, Chesapeake borrowed heavily to finance an aggressive expansion of its shale projects. The company only managed to survive through rounds of asset sales (which management is averse to), debt restructuring and M&A but could not prevent the inevitable--Chesapeake filed for Chapter 11  in January 2020, becoming the largest U.S. oil and gas producer to seek bankruptcy protection in recent years.

Thankfully, Chesapeake successfully emerged from bankruptcy last year with the ongoing commodity rally offering the company a major lifeline.

The new Chesapeake Energy has a strong balance sheet with low leverage and a much more disciplined CAPEX strategy. 

The company is targeting <1x long-term leverage in a bid to preserve balance sheet strength, target production is 400+ thousand barrels / day and intends to limit CAPEX to $700-750 million of annual capital expenditures and positive FCF. CHK says it expects to generate >$2 billion of FCF over the next 5 years, enough to improve its financial position significantly. 

By Alex Kimani for Oilprice.com

More Top Reads from Oilprice.com:

• Macro Data Dominates Oil Markets
• Oil Prices Dip As Inventories Build Across The Board
• Saudi Arabia And Russia Both Want $100 Oil

[Tom Nolan + 2,441]

THURSDAY morning 9/22/2022

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-triple-digit-eia-build-could-sink-prices-into-7-213-1135363

Natural Gas Price Fundamental Daily Forecast – Triple-Digit EIA Build Could Sink Prices into $7.213

By:James Hyerczyk

Updated: Sep 22, 2022, 07:28 CDT•3min read

Ahead of today’s EIA weekly storage report for the week-ended September 16, traders are looking for a consensus injection in the 90s Bcf.

Natural gas futures are edging lower on Thursday shortly before the release of the government’s weekly storage report.

According to a Reuters poll, U.S. utilities likely added a higher-than-usual amount into storage. It is expected to exceed both the build during the same week a year ago and the five-year average.

Traders are saying the size of the expected build could help put a dent in the 1 year and five year storage deficit.

At 11:50 GMT, November natural gas futures are trading $7.723, down 0.104 or -1.33%. On Wednesday, the United States Natural Gas Fund ETF (UNG) settled at $26.97, up $0.30 or +1.13%.

Short-Term Weather Outlook

According to NatGasWeather for September 22-28, “California and much of the West remain comfortable with highs of 60s to 80s as a weather system brings showers.

Hot high pressure continues to rule Texas, the South & Southeast with highs of 90s, while nice elsewhere with highs of 60s to 80s.

Mild weather systems will track across the Great Lakes and Northeast late this week and early next week with highs of mid-50s to 70s, while Texas and the South cools into the 80s to low 90s.

Overall, moderate national demand the next 2-days, then low after.”

EIA Weekly Storage Report:  Large Build Expected

Ahead of today’s Energy Information Administration (EIA) weekly storage report for the week-ended September 16, due to be released at 14:30 GMT, Natural Gas Intelligence (NGI) is reporting a consensus injection in the 90s Bcf.

According to NGI, the results of a Reuters poll ranged from predicted increases of 86 Bcf to 99 Bcf, with a median of 93 Bcf. Additionally, a Bloomberg survey spanned estimates of 80 Bcf to 104 Bcf, landing at a median expectation of an injection of 95 Bcf.

The estimates compare with the year-earlier injection of 77 Bcf and a five-year average of 81 Bcf.

A reading of 93 Bcf, for example, would lift stockpiles to 2.864 Trillion Cubic Feet (Tcf), about 6.7% below the same week a year ago and 10.7% below the five-year average.

The experts at NatGasWeather wrote, “Volatility has been extreme the past few weeks and we expect this will continue, aided by today’s EIA storage report, where survey averages suggest a build of 92-96.5 Bcf, larger than the 5-year average of 81 Bcf.

It was warmer than normal over the western, northern, and far eastern US, while a touch cool over the South and east-central US.

We expect a build of 101 Bcf. What’s also expected to impact trade is where a strengthening tropical cyclone in the Caribbean tracks, especially since some of the weather data forecasts it to arrive into the Gulf of Mexico next week, then into the US Gulf Coast after."

Daily Forecast

The main trend on the daily chart is down based on the series of lower tops and lower bottoms. The main range is $5.465 to $10.040. The market is currently testing its 50% to 61.8% retracement zone at $7.753 to $7.213.

Trader reaction to $7.753 to $7.213 is likely to determine the short-term direction of the market.

Look for an upside bias to develop on a sustained move over $7.753 and for a downside bias to develop on a sustained move under $7.213.

As far as the EIA report is concerned, any triple digit read is likely to be bearish and could trigger an acceleration to the downside under $7.213.

For a look at all of today’s economic events, check out our economic calendar.

[Tom Nolan + 2,441]

Thurs Sept 29 REUTERS - John Kemp

COLUMN-U.S. gas exports squeeze domestic supply: Kemp

https://finance.yahoo.com/news/column-u-gas-exports-squeeze-115125082.html

https://archive.ph/aU8XK

By John Kemp

LONDON, Sept 29 (Reuters) - U.S. gas production will need to increase significantly to continue growing exports while ensuring fuel remains affordable for domestic power producers, households and industrial users.

Production of dry gas (stripped of natural gas liquids) totalled 17,329 billion cubic feet in the first six months of the year, according to data from the U.S. Energy Information Administration (EIA).

Dry gas output was up by 944 billion cubic feet compared with the same period in 2019, the last year before the pandemic ("Monthly energy review", EIA, Sept. 27).

Domestic consumption increased by 440 billion cubic feet, with electricity generators accounting for 382 billion.

But exports surged by 1,408 billion cubic feet largely as a result of the commissioning of large new liquefaction terminals.

The massive increase in LNG exports has significantly tightened the availability of gas for domestic users and put upward pressure on prices.

As a result, inventories depleted by 876 billion cubic feet in the first six months of 2022 compared with just 246 billion in the first six months of 2019.

The drawdown was the second-largest on record and 65% higher than the average over the previous 10 years.

Chartbook: U.S. gas production, consumption and exports

OUTPUT GROWTH

To maintain and grow exports U.S. gas producers will need to increase their output significantly in both the short and longer term.

The number of rigs employed drilling for gas has already increased to 160, up from 99 at the same point last year, but is only slightly higher than the 146 at this point in 2019, according to field services company Baker Hughes.

A significant share of natural gas output is associated gas produced as a by-product of crude oil production from crude oil wells.

The number of rigs drilling for oil has increased to 602, up from 421 last year, but still well below the 713 at the same point in 2019.

Raw rig counts can be a misleading indicator of production except in the very short term because of changes in drilling efficiency over time.

Current rigs are likely to produce more gas than a similar-sized fleet three years ago because technology has improved, enabling faster drilling, longer underground laterals and a tighter focus on the most gas-rich areas.

But the industry will likely need an even more rigs to meet the high demand for gas from domestic users and export markets in Europe and Asia.

Futures prices for gas delivered in January 2024 have retreated to $5.60 per million British thermal units from $6.50 at the start of September but still far above $3.65 this time last year and $2.90 in 2019.

The rise in gas prices will help reduce the shortage, but the more recent downturn in the price of oil is likely to prove unhelpful because it will tend to reduce oil-directed drilling and associated gas output.

The challenge for the industry is to overcome supply chain constraints and scale up output profitably in order to satisfy domestic demand as well as its ambition to remain the primary supplier of the world's fast-growing gas market.

[Tom Nolan + 2,441]

https://oilprice.com/Latest-Energy-News/World-News/Natural-Gas-Futures-Slide-6-On-Weaker-Than-Expected-Demand.html

Natural Gas Futures Slide 6% On Weaker Than Expected Demand

By Alex Kimani - Oct 03, 2022, 10:30 AM CDT

Natural gas prices have continued falling with natural gas futures adding to their losses in early trading Monday as the markets fret over receding domestic demand prospects, rising production and possible disruption for American LNG export. 

 

Natural gas prices were down 6.08% on Monday at 10:46 a.m. EST, trading at $6.358, continuing their slide from Friday. 

 

ICAP Technical Analysis analyst Brian LaRose has told Natural Gas Intelligence that the bulls are in trouble because they “can not seem to find their footing, and they need to do more than just prevent natural gas from selling off. If they can not, a more substantial test of the $6.600-6.220 zone, even a drop to $5.730-5.713-5.689 is possible from here.”

EBW Analytics Group senior analyst Eli Rubin has also highlighted the “extremely weak” prices in the physical market.

“While demand was particularly weak with Hurricane Ian, Cove Point LNG offline, and weather-driven demand at a seasonal nadir, the soft market is indicative of further downside risks,” Rubin told NGI.

That said, natural gas prices could soon find a floor with the International Energy Agency (IEA) recently predicting that global gas markets will remain tight next year as Russian piped gas supplies dwindle despite gas demand falling in Europe in response to high prices and energy saving measures. 

According to the agency, global natural gas markets have been tightening since 2021 despite global gas consumption declining by 0.8% this year as a result of a record 10% contraction in Europe and flat demand in the Asia Pacific region. However, global gas consumption is forecast to inch up by 0.4% next year.

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com

• Hurricane Ian Shuts In 11% Of Gulf Of Mexico Oil Production
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• UK Debt Rates Surge As Pound Plunges Against The Dollar

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/European-Gas-Demand-Set-For-Record-Breaking-Decline-In-2022.html

European Gas Demand Set For Record-Breaking Decline In 2022

By Tsvetana Paraskova - Oct 03, 2022, 3:00 AM CDT

• A combination of soaring natural gas prices, an industrial slowdown, and energy-saving measures has sent European gas consumption falling.
• The International Energy Agency has forecast a 10% drop in annual gas demand in Europe, the largest drop on record.
• The pain is far from over for Europe, with Europe facing another year of gas consumption contraction in 2023 as markets remain tight.

Join Our Community

Soaring natural gas prices, demand destruction in the industrial sector, and energy-saving measures are set to reduce gas consumption in Europe’s developed economies by 10% this year, the biggest drop in European demand in history, the International Energy Agency (IEA) said in its quarterly Gas Market Report on Monday.

The forecast of a 10% decline in natural gas demand in OECD Europe reflects the expectation of higher gas prices and the EU’s ambition to reduce gas consumption by 15% between August 2022 and March 2023 compared to its five-year average.

“Assuming average weather conditions, gas demand in the residential and commercial sectors is expected to remain below 2021 levels,” the IEA said in its report.

Due to sky-high high prices and a very tight gas market, natural gas usage in the power generating sector in Europe is forecast to drop by nearly 3% this year. Industrial gas demand is expected to plunge by as much as 20%, the IEA said.

Energy-intensive industries in Europe, including aluminum, copper, and zinc smelters and steel makers, have already warned EU officials that they face an existential threat from surging power and gas prices. 

After a record slump in gas demand this year, Europe faces another year of gas consumption contraction in 2023, when OECD Europe’s demand is forecast to decline by 4% amid high prices, according to estimates from the IEA. The agency also noted that “Further potential disruption to the supply of Russian gas provides additional downside risk to this outlook.”

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, commented on the report: “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”

The IEA’s Executive Director Fatih Birol said last week that the gas market could be even tighter next year compared to already tight LNG markets in 2022.   

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Jumps On EIA Inventory Data
• OPEC Crude Oil Exports Trend Lower In September
• European Energy Security Faces New Risks With Nord Stream Explosions

[Tom Nolan + 2,441]

Reuters - Tuesday Oct 4

Exclusive-White House rules out ban on natural gas exports this winter

https://www.yahoo.com/news/exclusive-white-house-rules-ban-110949239.html

[Tom Nolan + 2,441]

On 10/3/2022 at 7:04 PM, Tom Nolan said:

https://oilprice.com/Energy/Energy-General/European-Gas-Demand-Set-For-Record-Breaking-Decline-In-2022.html

European Gas Demand Set For Record-Breaking Decline In 2022

By Tsvetana Paraskova - Oct 03, 2022, 3:00 AM CDT

• A combination of soaring natural gas prices, an industrial slowdown, and energy-saving measures has sent European gas consumption falling.
• The International Energy Agency has forecast a 10% drop in annual gas demand in Europe, the largest drop on record.
• The pain is far from over for Europe, with Europe facing another year of gas consumption contraction in 2023 as markets remain tight.

Join Our Community

Soaring natural gas prices, demand destruction in the industrial sector, and energy-saving measures are set to reduce gas consumption in Europe’s developed economies by 10% this year, the biggest drop in European demand in history, the International Energy Agency (IEA) said in its quarterly Gas Market Report on Monday.

The forecast of a 10% decline in natural gas demand in OECD Europe reflects the expectation of higher gas prices and the EU’s ambition to reduce gas consumption by 15% between August 2022 and March 2023 compared to its five-year average.

“Assuming average weather conditions, gas demand in the residential and commercial sectors is expected to remain below 2021 levels,” the IEA said in its report.

Due to sky-high high prices and a very tight gas market, natural gas usage in the power generating sector in Europe is forecast to drop by nearly 3% this year. Industrial gas demand is expected to plunge by as much as 20%, the IEA said.

Energy-intensive industries in Europe, including aluminum, copper, and zinc smelters and steel makers, have already warned EU officials that they face an existential threat from surging power and gas prices. 

After a record slump in gas demand this year, Europe faces another year of gas consumption contraction in 2023, when OECD Europe’s demand is forecast to decline by 4% amid high prices, according to estimates from the IEA. The agency also noted that “Further potential disruption to the supply of Russian gas provides additional downside risk to this outlook.”

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, commented on the report: “The outlook for gas markets remains clouded, not least because of Russia’s reckless and unpredictable conduct, which has shattered its reputation as a reliable supplier. But all the signs point to markets remaining very tight well into 2023.”

The IEA’s Executive Director Fatih Birol said last week that the gas market could be even tighter next year compared to already tight LNG markets in 2022.   

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Jumps On EIA Inventory Data
• OPEC Crude Oil Exports Trend Lower In September
• European Energy Security Faces New Risks With Nord Stream Explosions

European Gas Demand Set For Record-Breaking Decline In 2022

by Tyler Durden

Wednesday, Oct 05, 2022 - 06:20 AM

By Tsvetana Paraskova of OilPrice.com

Soaring natural gas prices, demand destruction in the industrial sector, and energy-saving measures are set to reduce gas consumption in Europe’s developed economies by 10% this year, the biggest drop in European demand in history, the International Energy Agency (IEA) said in its quarterly Gas Market Report on Monday.

article continues...

[Tom Nolan + 2,441]

https://www.zerohedge.com/weather/more-bad-news-europe-forecasters-predict-colder-winter-less-renewable-power

More Bad News For Europe: Forecasters Predict Colder Winter, Less Renewable Power

by Tyler Durden

Wednesday, Oct 05, 2022 - 04:45 AM

Just days after we learned that Europe's cell phone tower energy reserves will last 30 minutes during the upcoming mass blackouts, putting the entire European cellular system in jeopardy, the continent which will soon replace Russia with the US as its vassal master and energy sponsor, got even more bad news: according to Florence Rabier, director-general of the European Centre for Medium-Range Weather Forecasts (ECMWF), i.e., the European weather forecasting agency,  early indications for November and December were for a period of high pressure over western Europe, which was likely to bring with it colder spells and less wind and rainfall, reducing the generation of renewable power.

This, as the FT translates, means that Europe could suffer a colder winter with less wind and rain than usual, adding to the challenges for governments trying to solve the continent’s energy crisis.

Needless to say, the forecast - which is based on data from the ECMWF and several other weather prediction systems including those in the UK, US, France and Japan - is a major problem for European politicians as they try to contain soaring energy costs for businesses and households owing to huge cuts in gas imports from Russia, and to moderate public anger and outrage at the coming freezing winter where Europe has somehow promised to cut demand by as much as 20% (nobody knows just how it will do that).

Adding insult to injury, however, is that Europe's fascination with renewable energy will once again be a huge disappointment: “If we have this pattern then for the energy it is quite demanding because not only is it a bit colder but also you have less wind for wind power and less precipitation for hydro power,” Florence Rabier told the Financial Times.

Rabier said recent hurricanes across the Atlantic could cause milder, wetter and windier weather in the short term. But cooler weather later in the year would be consistent with the atmospheric conditions known as La Niña, a weather pattern derived from the cooling of the Pacific Ocean’s surface, which drives changes in wind and rainfall patterns in different regions.

Of course, this could prove to be just another example of Europe being woefully wrong at forecasting, well, anything (just note the ECB's track record). Weather in Europe is difficult to predict as the conditions are dictated by several remote factors including winds in the tropical stratosphere and surface pressure across the Atlantic.

In any case, there is a faint silver lining to Europe's coming deep freeze: as Reuters' reporter John Kemp reports, Europe is entering winter with a near-record volume of gas in storage after buying large volumes at almost any price over the summer to prepare for an interruption of supplies from Russia.

Gas inventories in the European Union and the United Kingdom (EU28) had climbed to 996 terawatt-hours (TWh) by Sept. 30, according to data from Gas Infrastructure Europe (GIE). For the time of year, inventories were at the third highest on record, with higher volumes only in 2020 (1,074 TWh) and 2021 (1,067 TWh).

Storage had risen by around 700 TWh from its post-winter low, the second-fastest increase on record, as suppliers purchased as much gas as possible despite exceptionally high prices.  As a result, stocks ended the summer refill season +98 TWh (+11% or +0.83 standard deviations) above the prior ten-year average.

This is a huge turnaround from the end of January, when they were -134 TWh (-23% or -1.34 standard deviations) below.

As Kemp forecasts, Inventories are likely to continue increasing for at least another three weeks until late October, but the build could persist into early November, depending on temperatures and how far high prices restrain consumption. Since 2011, the median date on which storage peaked was Oct. 26, but in two cases inventories continued rising into the first half of November.

Based on previous seasonal movements, storage is expected to peak around 1,025 TWh, with a likely range from 1,009 TWh to 1,053 TWh.

But the volume of gas in store is still increasing at an average rate of more than 2.3 TWh per day, implying it is likely to climb towards the top of the range.

Is it enough?

EU storage is more than 89% full and UK storage is more than 94% full, with extra stocks likely to be added over the next 3-6 weeks. Storage is well ahead of the formal target of 80% this year (preferably 85%) by Nov. 1 agreed by the EU in June (“Council adopts regulation on gas storage”, European Council, June 27).

According to Kemp, European governments have fulfilled their stated objective of maximizing the volume of gas in storage ahead of winter 2022/23 to reduce the impact of a disruption of pipeline supplies from Russia. But storage is intended to deal with seasonal variations in consumption, not provide a strategic reserve in case of an embargo or blockade.

Maximizing the volume of stored gas will alleviate the impact of any supply disruptions but it is not enough to guarantee supply security. In the event of a complete cessation of imports from Russia, a colder than normal winter such as the one forecast, or both, gas would become scarce before the end of March 2023.

Even if Europe scrapes through this winter, inventories are likely to end at very low levels, requiring another, perhaps even bigger, restocking next year ahead of winter 2023/24.

Bottom line: inventory accumulation has put Europe in a stronger position than at this time last year but regional supplies are still at risk which will require further action from the market and policymakers. Supply security depends critically on the ability to reduce consumption well below prior year levels - irrespective of temperatures and the level of heating demand. And if Europe has a truly cold winter, then all bets are off...

[Tom Nolan + 2,441]

Front-month Dutch gas futures traded around €170 MWh, not far from 2-1/2-month lows and more than 50% below record levels of above €300 hit in March and August as concerns about shortages eased on milder weather and full stockpiles. Gas storage sites in Germany were 92.8% full as of October 4th, above the EU average of 89.9%. Also, Russia’s Gazprom said gas flows via Austria to Italy are resuming following the suspension of flows over the weekend amid regulatory challenges. Meanwhile, in the next few weeks, the temperature across Europe and UK is forecasted to remain above average. On Wednesday, it was reported that European Commission President Ursula von der Leyen will suggest to EU leaders how the EU could cap gas prices to pull down soaring inflation. Elsewhere, Malaysia's Petronas declared force majeure on supply to its LNG export facility due to a pipeline leak, which is likely to increase competition between Asia and Europe over uncommitted LNG cargoes.

10/06/2022 Thursday morning U.S. time

https://tradingeconomics.com/commodity/eu-natural-gas

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/Germany-Needs-To-Slash-Natural-Gas-Consumption-To-Avoid-A-Winter-Emergency.html

Germany Needs To Slash Natural Gas Consumption To Avoid A Winter Emergency

By Tsvetana Paraskova - Oct 06, 2022, 6:54 AM CDT

• Last week, the natural gas consumption of German households and small businesses was 10% above the four-year average for that week.
• The Federal Network Agency, Bundesnetzagentur is once again warning that the country needs to reduce its natural gas consumption by 20%.
• Without a significant reduction in savings, it will be difficult for Germany to avoid a natural gas shortage this winter.

Germany may be unable to avoid a gas emergency this winter if all consumers don’t significantly cut consumption in Europe’s biggest economy, according to Klaus Müller, the president of the Federal Network Agency, Bundesnetzagentur.

“The situation may become very serious if we do not significantly reduce our gas consumption,” Müller told Reuters on Thursday, adding that households, industry, and businesses need to cut consumption by at least 20%. According to the regulator, German households and small businesses used nearly 10% more gas than the four-year average for that week.

The agency, the regulator to impose rationing in case of severe shortages, published on Thursday its weekly report on gas supply and demand in Germany. The data showed that gas consumption rose in the latest reporting week by 10% to 618-gigawatt hours per week (GWh/week) from 483 GWh/week in the previous week, and was above the average for the same week between 2018 and 2021.

The agency once again called on all consumers to conserve gas, as it “emphasizes the importance” of savings.

This week’s appeal for gas conservation comes after a similar appeal last week when the agency said that Germany’s gas consumption rose too much - to levels higher than in previous years, and without considerable gas conservation, Europe’s biggest economy will find it challenging to avoid gas shortages this winter.

“Without significant savings, also in the private sector, it will be difficult to avoid a gas shortage in the winter,” the agency’s president Klaus Müller said last week.  

Gas storage sites are more than 92% full, the regulator said today, but warned that gas price fluctuations are huge. Despite the recent drop in gas prices, businesses and households “will have to continue to prepare for very high gas prices,” the agency added.

If the coming winter is colder than usual, Germany could see severe nationwide gas shortages, which it will not be able to predict more than two weeks in advance, Müller said in September.

“I can’t give an exact forecast of where the risk of a shortage is the greatest,” Müller told German business daily Handelsblatt in mid-September.

“If we get a very cold winter, we have a problem.”

By Tsvetana Paraskova for Oilprice.com

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[Tom Nolan + 2,441]

https://oilprice.com/Latest-Energy-News/World-News/Belgium-Calls-For-A-Natural-Gas-Price-Cap-To-Avoid-Deindustrialization.html

Belgium Calls For A Natural Gas Price Cap To Avoid Deindustrialization

By Tsvetana Paraskova - Oct 06, 2022, 3:30 AM CDT

The European Union needs to quickly intervene in its gas and energy markets, including by imposing a price cap on wholesale gas, to avoid a spiral of deindustrialization and social unrest amid sky-high energy prices, Belgium’s Prime Minister Alexander De Croo told the Financial Times in comments published on Thursday.  

The EU will look to reform the electricity market to decouple the dominant influence of gas on the price of electricity, European Commission President Ursula von der Leyen said in the middle of September.

“These are all emergency and temporary measures we are working on, including our discussions on price caps,” the Commission's president said, without referring to specific price caps on gas, or Russian gas only.

Commenting on the need to adopt measures as soon as possible, Belgium’s De Croo told FT that if the EU didn’t intervene in the gas market, “we are risking a massive deindustrialization of the European continent and the long-term consequences of that might actually be very deep.”

The energy crisis is already pushing Germany – Europe’s biggest economy – into a recession, which will deepen as we head into the winter months amid the ongoing natural gas and energy crisis. Across Europe, industries are forced to curb or shut down production due to soaring energy prices.

The prime minister of Belgium, which has been one of the EU member states calling for a gas price cap for months, said the EU could impose a hard cap on Russian gas and a flexible ceiling on LNG imports, which would still be high enough for LNG exporters to have the incentive to bring it to Europe.

The European Commission has been reluctant so far to propose a gas price cap precisely because of the concern that by limiting the price, LNG exporters will simply skip Europe and sell their cargoes to customers in Asia.

Ben van Beurden, CEO at the world’s top LNG trader, Shell, admitted as much earlier this week. A price cap on gas would make Shell’s and other traders’ efforts to bring more LNG to Europe much more difficult, he said at the Energy Intelligence Forum in London on Tuesday.

“We will do our best to bring gas to Europe where it’s needed, but if the market signal is not there it’s going to be really challenging,” said van Beurden.      

By Tsvetana Paraskova for Oilprice.com

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[Tom Nolan + 2,441]

https://oilprice.com/Energy/Natural-Gas/Why-The-US-Will-Not-Ban-LNG-Exports.html

Why The U.S. Will Not Ban LNG Exports

By Josh Owens - Oct 04, 2022, 10:00 AM CDT

• The White House intends to keep LNG exports to Europe flowing through winter.
• American LNG has been crucial in meeting demand in Europe, which is scrambling for gas supply and willing to pay up for spot deliveries.
• High demand in Europe, high natural gas prices, and increased export capacity made the United States the world’s largest LNG exporter in the first half of 2022.

Join Our Community

Despite the rise in U.S. energy bills, the White House will not limit in any way, let alone ban, exports of natural gas this winter, as it aims to help Europe with the energy crisis, two sources involved in the discussions told Reuters on Tuesday.

The U.S. has been sending increased volumes of liquefied natural gas (LNG) to Europe since the Russian invasion of Ukraine and the subsequent halt of Russian pipeline gas supply to most of its customers in Europe.

In fact, American LNG has been crucial in meeting demand in Europe, which is scrambling for gas supply and willing to pay up for spot deliveries, outbidding most of Asia.

High demand in Europe, high natural gas prices, and increased export capacity made the United States the world’s largest LNG exporter in the first half of 2022, the U.S. Energy Information Administration said in July. The United States is shipping record volumes of LNG to Europe to help EU allies in their efforts to fill gas storage ahead of the winter amid growing uncertainty about Russian gas supply. Most U.S. LNG exports went to the EU and the UK during the first five months of 2022, accounting for 71%, or 8.2 Bcf/d, of the total American LNG exports, according to the EIA. 

For the first time ever, the European Union imported in June more LNG from the United States than gas via pipeline from Russia, as Moscow slashed its supply to Europe. 

In September, as much as 70% of all U.S. LNG exports in September were headed to Europe, up from 63% in August, per Refinitiv Eikon data cited by Reuters on Monday.

But high prices and low inventories in the United States have had the White House considering a possible limit to LNG exports. An analysis found that curbs on exports would fracture U.S. relations with its key ally, the EU, Reuters’ sources said today, adding that a total ban was never seriously considered.  

By Josh Owens for Oilprice.com 

https://www.zerohedge.com/markets/why-us-will-not-ban-lng-exports

Why The US Will Not Ban LNG Exports

by Tyler Durden

Thursday, Oct 06, 2022 - 10:26 AM

By Josh Owens of OilPrice.com

Despite the rise in U.S. energy bills, the White House will not limit in any way, let alone ban, exports of natural gas this winter, as it aims to help Europe with the energy crisis, two sources involved in the discussions told Reuters on Tuesday.

The U.S. has been sending increased volumes of liquefied natural gas (LNG) to Europe since the Russian invasion of Ukraine and the subsequent halt of Russian pipeline gas supply to most of its customers in Europe.

[Tom Nolan + 2,441]

https://www.fxempire.com/forecasts/article/natural-gas-pulls-back-ahead-of-the-weekend-1153978

Natural Gas Pulls Back Ahead Of The Weekend

By:Vladimir Zernov

Updated: Oct 7, 2022,

Natural gas settled below the $7.00 level and declined towards the support level at $6.75.

Key Insights

• Yesterday’s EIA report put pressure on natural gas markets. 
• In Europe, natural gas is trading near weekly lows. 
• Natural gas remains stuck in the wide $6.30 – $7.20 range. 

Natural Gas Prices Are Moving Lower

Natural gas gained strong downside momentum and moved towards the support at $6.75 as rising inventories put pressure on prices. Yesterday, EIA reported that working gas in storage increased by 129 Bcf, compared to analyst consensus of 113 Bcf.

Interestingly, there was no significant reaction in the first hours after the release of the report. However, natural gas has ultimately found itself under pressure, settled below the $7.00 level and declined towards $6.75.

In Europe, natural gas prices moved towards multi-month lows. It remains to be seen whether this trend will be sustainable as demand will soon increase due to the start of the heating season.

Natural Gas Needs To Get Out Of The Current Trading Range To Gain Momentum

 

From a big picture point of view, natural gas is stuck in the wide range between the support at $6.30 and the resistance at $7.20.

Natural gas has recently made an attempt to settle above the resistance at $7.20, but this attempt yielded no results.

Currently, natural gas is moving towards the low end of the current trading range. In case natural gas settles below the support at $6.75, it will head towards the next support level at $6.55. A move below this level will push natural gas towards the key support at $6.30.

It should be noted that natural gas will not be able to gain significant downside momentum until it settles below the support level at $6.30.

On the upside, natural gas needs to get above the resistance at $7.20 to have a chance for a significant rebound. The 20 EMA is located near the $7.20 level, so natural gas will likely face strong resistance in the $7.20 – $7.30 area.

It remains to be seen whether natural gas will have enough positive catalysts for another test of the resistance at $7.20 if the working gas in storage continues to increase at a robust pace.

For a look at all of today’s economic events, check out our economic calendar.

 

 

[Tom Nolan + 2,441]

- U.S. Nat Gas -

https://www.zerohedge.com/markets/your-next-pain-will-be-soaring-electricity-costs-energy-crisis-comes-america

Your Next Pain Will Be Soaring Electricity Costs As Energy Crisis Comes To America

by Tyler Durden

Saturday, Oct 08, 2022 - 03:10 PM

One central theme that comes to mind is the impact of higher natural gas prices and, by extension, power prices. Americans will soon see higher gasoline prices at the pump because of OPEC+ production cuts slated for next month. Many folks will also see their electricity bills rise this winter because NatGas generators power a large percentage of the country's grid. This is a double whammy for hundreds of millions of Americans ahead of the midterm elections in about a month -- as Democrats scramble to find solutions to tame the energy crisis. 

From the blowing up of the Nord Stream pipeline system in the Baltic Sea (in NATO's backyard) to reduced Russian NatGas flows to Europe to soaring US liquefied natural gas (LNG) exports to Europe, NatGas markets will be very tight everywhere this winter. 

"With US gas storage finishing this summer well below average levels, and lower than what we expected previously owing to strong power burns, we believe there is a mispricing of this upside risk to gas prices in the near-term," Goldman Sach commodity analyst Samantha Dart wrote in a note to clients last month. 

Dart revised her Winter 2022-2023 forecast up to $7.75/mmBtu from the previous $6.93/mmBtu on renewed tightening fears, and her view of US LNG exports will be higher. The Freeport LNG outage is expected to be resolved next month, increasing LNG exports to the EU. 

Prices of NatGas are trading about 94% higher than at the start of the year and 370% higher than the 2020 lows.

This means that power generation units at utilities will be even more expensive to operate and pass along costs to end users. 

"We're looking at fairly high gas prices, so all things equal, electricity prices should be higher as well," Sarah Emerson, managing principal at ESAI Energy, told Yahoo Finance. "We're going to have a pretty strong winter [for prices]."

A recent National Energy Assistance Directors Association forecast said the average US household heating bill is expected to increase by 17.2%. 

"The rise in home energy costs this winter will put millions of lower-income families [at] risk of falling behind on their energy bills and having no choice but to make difficult decisions between paying for food, medicine and rent," said Mark Wolfe, executive director of NEADA.

OilPrice.com's Robert Rapier explains more about soaring electricity costs for Americans in the months ahead due in part to the global energy crisis that is finally washing ashore. 

And even before the cold season begins, there are 20 million households behind on their power bills. Now power companies are renegotiating power contracts with households, increasing the price per kilowatt substantially. 

A double whammy at the gas pump and utility bill should stoke discontent with many Americans who've been battered by high inflation under the Biden administration as the Federal Reserve attempts to quell high prices with aggressive interest rate hikes that could plunge households into even more financial chaos by stoking a 2023 recession. What a mess the elites in Washington have caused. 

[Boat + 1,315]

The only crisis in America is our politicians. Our legislators turn excess into exports then charge citizens more at the pump and at the store. International and internal corruption is rampant. 

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/The-EU-Is-Divided-Over-Its-Natural-Gas-Price-Policy.html

The EU Is Divided Over Its Natural Gas Price Policy

By Irina Slav - Oct 10, 2022, 6:00 PM CDT

• Internal divisions are deepening within the EU as countries attempt to lower the price of natural gas while also ensuring they secure enough of it.
• Germany’s decision to announce a 200-billion-euro aid package to ease its domestic crisis while opposing a price cap has angered some members.
• EU leaders are meeting again towards the end of the month, and they will aim to find a gas price policy that can please all its members and, most importantly, the sellers.

Join Our Community

The European Union’s leaders have been hard at work trying to find ways to ensure both the security and affordability of energy in the bloc over the past few months. Initially focusing on the security part, affordability has now claimed the spotlight.

As heating season begins, EU member states are turning on each other in their increasingly desperate attempts to secure enough gas to last until spring and to ensure that it is affordable. Some believe this could indeed lead to radical measures that would lower prices. Others are not so sure.

The EU’s energy ministers have been meeting regularly over the past few weeks to discuss possible measures for ensuring the supply of gas for all member states in a situation where the largest supplier of the bloc, Russia, is gone for, many believe, good.

Norway has stepped up, so has the United States, and even the UAE has agreed to send five cargoes of LNG to Germany next year. But that’s next year. Now, Europe needs more gas, and it needs it on the cheap. Its options are not exactly unlimited.

A group of 15 member states suggested last month that the EU caps the price of all gas imports to manage its expenses. They did not comment on what LNG sellers might have to say about that idea, insisting that this was the only way to ensure gas is affordable for Europeans in what is shaping up to be the harshest winter for Europe in generations, regardless of the weather.

Then a smaller group came up with a more precise idea for the caps. The idea is to set up a so-called gas price corridor, or a range, that is lower than market prices but moves with them. According to the authors—Belgium, Greece, Italy, and Poland—this corridor could also apply to long-term contracts. Again, it seems that nobody consulted the sellers.

The Commission has spoken against price caps for non-Russian gas imports. Instead of a blanket cap, President Ursula von der Leyen proposed capping the price of natural gas used to generate electricity. Discussions continue, but hostility within the EU is growing, making the need to decide on working measures all the more urgent.

Germany, for instance, has managed to turn a lot of European states against it after it announced a 200-billion-euro aid package for businesses and households to cope with soaring energy prices. Naturally, less wealthy EU members weren’t happy with that. They were even less happy that Germany opposed a gas price cap.

“If Germany acts only on the national level what they might be doing is really compromising the economic stability of Europe and also jeopardizing the political unity,” Simone Tagliapietra, research fellow at Belgian NGO Bruegel, told the Wall Street Journal.

The WSJ noted in a report on the gas discussions in Europe that the internal tensions in the bloc could in fact help it become more decisive about crisis measures and ultimately agree to a gas price cap.

This, the authors of the report argued, would not be the best news for LNG exporters, but they could agree to sell their LNG at a lower price to avoid a deep recession in Europe that would destroy longer-term gas demand.

On the other hand, a report in Euronews quoted energy experts as warning that a price cap on gas imports would “end the market as we know it.” One of these experts, Elisabetta Cornago, a senior energy researcher at the Centre for European Reform, told Euronews that the EU was looking at gas prices without reference to other factors, and that reference needed to be made, because “Prices are high because of scarcity.” 

Indeed, capping gas prices will not be enough. There is simply not enough LNG and pipeline gas outside Russia for Europe to breeze through winter as usual. And there are not enough regasification terminals in Europe to ensure an even supply of gas across the bloc.

Under pressure, the EU is turning on the ones that do supply it with gas. Euractiv reported this month that complaints about Norway’s revenues from its higher gas exports to the bloc are growing louder. In Germany, Economy Minister Habeck and an MP separately accused the U.S. of charging too much for its LNG. Tensions are running high.

EU leaders are meeting again towards the end of the month. By then, hopes are that they will have tailored a decision on gas prices that would provide some relief to struggling economies facing a recession. 

Yet hopes are elusive. Hoping is one thing, but getting everyone to work together to make those hopes a reality is another thing altogether. With increasingly deep divisions within the bloc that has been calling for unity and solidarity in a time of adversity, it is difficult to see a workable decision being made anytime soon that would satisfy all members. And we have yet to hear from the gas sellers.

By Irina Slav for Oilprice.com

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[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/Europes-Race-To-Ensure-Gas-Supply-Comes-At-A-Cost.html

Europe’s Race To Ensure Gas Supply Comes At A Cost 

By Tsvetana Paraskova - Oct 10, 2022, 4:00 PM CDT

• Europe has managed to fill its gas storage sites to nearly 90%.
• Europe is paying high prices for LNG, and these prices are determined by traders in a tight market.
• For the first time ever, the European Union imported in June more LNG from the United States than gas via pipeline from Russia.

Join Our Community

Europe has managed to fill its gas storage sites to nearly 90% as winter approaches, but stocking up on gas has come at a price. Gas and energy prices are now so high that energy-intensive industries are shutting down production lines or whole factories, while households are constantly being asked to conserve gas and electricity to avoid rationing and/or blackouts this winter.    The EU, most of which is now deprived of any gas supply from Russia, is doing relatively well with stocking up on alternative supply. The prices, however, are high, and so is the price that industries, residential consumers, and governments must pay. 

As of October 9, gas storage sites in the EU were 88.58% full, according to data from Gas Infrastructure Europe. Storage in Germany, the biggest economy, was 94% full, and the one in Italy—at 92.7%. 

“Europe really wanted this time around to have their storage full. They kind of learned a lesson last winter that it’s not a good thing [to not have enough gas in storage], especially if the supply is not given or is uncertain,” Anna Mikulska, Nonresident Fellow at the Center for Energy Studies, Baker Institute, said last week. 

“Currently the storage is at a very high level, sometimes 100 percent, most of the time beyond 80 percent,” Mikulska said at the panel ‘Energy Market Update: Winter Is Coming’ last week.

Yet, “This did not come at zero cost,” the industry expert said. 

Europe is paying high prices for LNG, and these prices are determined by traders in a tight market, not by the U.S. LNG producers and exporters, Mikulska said during the panel. 

Related: U.S. Households See Electricity Bills Soar As Energy Crisis Comes To America

“It’s the companies that buy the gas from U.S. producers, and it usually goes where the price is highest,” she said.

American LNG has been crucial in meeting European demand, which is scrambling for gas supply and willing to pay up for spot deliveries, outbidding most of Asia.

High demand in Europe, high natural gas prices, and increased export capacity made the United States the world’s largest LNG exporter in the first half of 2022, the U.S. Energy Information Administration said in July. 

For the first time ever, the European Union imported in June more LNG from the United States than gas via pipeline from Russia, as Moscow slashed its supply to Europe. 

In September, as much as 70% of all U.S. LNG exports in September were headed to Europe, up from 63% in August, per Refinitiv Eikon data cited by Reuters earlier this month.   

But this influx of LNG supply to secure Europe’s winter comes at a cost. 

“It came at a cost of cutting down demand in industry. And that’s the big story of this winter and the year coming forward. It’s not only about the inability to heat houses, which obviously is something that you are going to prevent, but it’s about the ability of Europe to recover going forward from the industrial downturn that cutting supply of gas to industry has caused,” Mikulska said.  

Due to sky-high prices and a very tight gas market, natural gas usage in the power-generating sector in Europe is forecast to drop by nearly 3% this year. Industrial gas demand is expected to plunge by as much as 20%, the International Energy Agency (IEA) said in its quarterly Gas Market Report early this month. 

Energy-intensive industries in Europe, including aluminum, copper, and zinc smelters and steel makers, have already warned EU officials that they face an existential threat from surging power and gas prices. 

“All the signs point to markets remaining very tight well into 2023,” Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, said. 

Despite the high LNG imports and the rush to build LNG import terminals, Europe could still face rationing or power outages this winter, and a longer-term deindustrialization as energy-intensive industries relocate some production out of the continent.  

The EU has admitted that the increased supply of non-Russian gas needs to be coupled with reductions in demand if the gas market is to balance any time soon. Germany’s regulator has been calling for months for “significant” cuts in gas consumption to avoid a gas emergency and subsequent rationing of gas use.

By Tsvetana Paraskova For Oilprice.com

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• European Energy Market Spooked By $1.5 Trillion Liquidity Crisis
• Russia Not Ruling Out Repair Of Nordstream Gas Pipelines
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[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/Natural-Gas-Prices-In-Europe-Fall-To-A-Three-Month-Low.html

Natural Gas Prices In Europe Fall To A Three-Month Low

By Tsvetana Paraskova - Oct 10, 2022, 6:34 AM CDT

• On Monday, Europe’s natural gas prices fell to the lowest level in three months thanks to mild weather and a high level of LNG imports.
• Natural gas prices were down nearly 8% in early trading in Amsterdam, hitting an intra-day low of $140 per megawatt-hour.
• Gas storage in the EU is now at more than 90% and the bloc has managed to reduce its gas consumption by 10%

Join Our Community

Europe’s natural gas prices dropped on Monday to the lowest level in three months as LNG imports climbed while weather forecasts pointed to a milder-than-expected autumn.

Natural gas prices at the Dutch TTF hub, Europe’s benchmark, were down by nearly 8% in early trade in Amsterdam on Monday. Prices hit an intra-day low of $140 (144 euros) per megawatt-hour (MWh), the lowest European benchmark gas price since July 1.

Strong imports of liquefied natural gas (LNG) into Europe and milder weather over the next week or two are the two key reasons for the dip in gas prices at the beginning of this week. Higher nuclear power generation from France compared to the previous months is also helping electricity supply across the continent, thus curbing some gas demand for power.

Imports of LNG cargoes into northwest Europe have reached their highest level for this time of the year since 2016, per data compiled by Bloomberg. According to Reuters, nine LNG tankers are currently expected to arrive in the UK alone by the end of the month.

The three-month low gas prices in Europe today are “driven by strong LNG arrivals, mild autumn weather and demand destruction,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said. Russia’s ability to shock the market has been much reduced, with flows down 78% year over year, Hansen added.

Weather will be mild in most of Europe over the next two weeks, models suggest, which would also alleviate upward pressure on gas demand for heating and electricity.

Meanwhile, EU leaders have yet to agree on some form of capping gas prices after failing to do so at a summit in Prague last week. The EU is negotiating “a corridor for decent prices” with reliable suppliers, or for example, “looking at how to limit prices in the gas market overall,” European Commission President Ursula von der Leyen said at the end of last week.

“Gas storage in the EU is now at more than 90%,” the European Commission said this weekend. “Good news: we have already reduced our gas consumption by about 10% but more can still be done,” the Commission says.

By Tsvetana Paraskova for Oilprice.com

More Top Reads from Oilprice.com:

• European Energy Market Spooked By $1.5 Trillion Liquidity Crisis
• Russia Not Ruling Out Repair Of Nordstream Gas Pipelines
• Russia’s Soaring Defense Spending Is Unsustainable

[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/Russia-Will-Terminate-Natural-Gas-Supplies-If-A-Price-Cap-Is-Implemented.html

Russia Will Terminate Natural Gas Supplies If A Price Cap Is Implemented

By Irina Slav - Oct 17, 2022, 1:19 AM CDT

• The EU is considering a price cap on Russia’s natural gas exports in order to reduce both its energy bill and Russia’s ability to wage war on Ukraine,
• The CEO of Gazprom has said that a price cap on Russian natural gas would lead to a termination of supplies as it would violate existing contracts.
• EU leaders are meeting again at the end of this week, at which point the Commission is expected to make its official proposal on the issue.

Join Our Community

Any decision to impose a price cap on Russian natural gas exports would result in the suspension of said exports, the chief executive of Gazprom, Alexei Miller, said in response to reports the EU is considering such a move.

"Such a one-sided decision is of course a violation of existing contracts, which would lead to a termination of supplies," Miller said on Russian TV, as quoted by Reuters.

Russian gas deliveries to Europe have already declined substantially since the Ukraine invasion as the EU rushed to diversify its sources of the commodity and Gazprom reduced flows via the Nord Stream 1 pipeline before it got blown up last month.

The European Union has been hard at work trying to find a way to reduce its gas bill, with price caps among the most actively promoted options. However, there is no agreement yet on the kind of price caps to be implemented.

A group of 15 members has called on the Commission to implement price caps on all gas imports, both from Russia and from countries such as Norway, Algeria, and the United States.

The Commission and some other EU members including Germany and the Netherlands, however, have warned against such a move as it would put the security of supply at risk.

The Commission has instead proposed a price cap on Russian gas supply only, prompting a reaction from the Russian side. EU leaders are meeting again at the end of this week to discuss their options, with the Commission expected to make its official proposal on the issue.

"Impatience is growing with member states," an unnamed EU diplomat told Reuters this weekend. "So we changed gear and put everything that is being floated... on the table. It is a way of putting pressure on the Commission to come up with the most concrete possible proposals."

By Irina Slav for Oilprice.com

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[Tom Nolan + 2,441]

https://oilprice.com/Energy/Energy-General/Why-The-US-Largest-Shale-Gas-Basin-Misses-Out-On-The-LNG-Boom.html

Why The U.S.’ Largest Shale Gas Basin Misses Out On The LNG Boom

By Tsvetana Paraskova - Oct 16, 2022, 4:00 PM CDT

• The largest U.S. shale basin is stymied by regulatory hurdles.
• The U.S. Northeast is importing LNG from foreign producers to meet its gas demand.
• A lack of infrastructure and legal uncertainty are holding back an increase in LNG exports.

Join Our Community

Regulatory hurdles are stymieing growth in natural gas production in the Marcellus-Utica basin, the largest U.S. gas-producing region, which is set to miss out on the expected boom in American liquefied natural gas (LNG) exports in the coming years.  

Not only is Marcellus-Utica missing the opportunity to export and monetize natural gas in a world scrambling for LNG supply, but it is also unable to provide more natural gas to the regions close to it in New England, analysts and the pipeline industry say. 

In one of the most ironic twists in American energy these days, the U.S. Northeast is importing LNG from foreign producers to meet its gas demand. 

New England’s predicament is the result of the regulatory hurdles the U.S. states in the Northeast have posed to natural gas pipeline infrastructure, the Interstate Natural Gas Association of America says. The association calls for permitting reform and regional support to pipeline companies that are ready to build infrastructure but have seen a lot of projects delayed and tied up in lengthy court battles, which have swelled costs. 

One such project was the Atlantic Coast project, a pipeline from West Virginia to North Carolina along a route that had to pass through the Appalachian Trail in Virginia. In the summer of 2020, despite a major win on the right-of-way issue at the U.S. Supreme Court, the developers of the pipeline definitely scrapped the project due to ongoing delays and major cost overruns.

“This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States. Until these issues are resolved, the ability to satisfy the country’s energy needs will be significantly challenged,” the top executives of Dominion Energy and Duke Energy said at the time. 

Related: 

Over the past few years, developers haven’t proposed many new gas pipelines in the U.S. Northeast due to permitting issues and bans from states such as New York.

The midstream infrastructure capital has shifted from Marcellus-Utica down to the U.S. Gulf Coast, Kevin Little, senior vice president for natural gas at Macquarie Energy, said during Hart Energy’s America’s Natural Gas conference.

Projects for LNG exports are now being developed in Texas and Louisiana, and despite the fact that greenfield natural gas projects are tough to develop even in Texas and Louisiana, America’s LNG exports are set to double by 2027, Little said.

On the East Coast, the hurdles are greater. 

“If you have to get an act of Congress to get your permits to build a pipeline, if you’ve got to go to the Supreme Court and you still can’t build a pipeline, this is not a great environment to build midstream infrastructure,” the expert said, as carried by Hart Energy. 

In the U.S., LNG export capacity is growing as new trains at Sabine Pass and Calcasieu Pass came online this year. But in order to continue growing, the LNG industry will need more domestic midstream infrastructure - pipelines - to carry natural gas from production centers to LNG export terminals on the U.S. Gulf Coast and demand centers on the Eastern Seaboard. 

More pipeline capacity is also needed for New England’s energy demand, the Interstate Natural Gas Association of America said last month as energy prices spike in the region. 

“Without additional energy infrastructure, New Englanders will continue to face uncertainty and the risk of future energy shortages,” INGAA said in September. 

“BandAid fixes” to New England’s gas supply such as suspending the Jones Act to temporarily ease receipt of more LNG imports and federal assistance in paying for New England consumers’ energy bills, “are not lasting or affordable solutions to addressing electric reliability concerns,” INGAA president and CEO Amy Andryszak wrote in an op-ed in Boston Herald last month.  

“While all eyes have been on Europe for how their energy crisis will play out, the reality is many American consumers face similar reliability issues here at home, particularly in New England,” Andryszak said, but noted that there’s one significant difference between New England and Europe. 

“The U.S. is the No. 1 gas producer in the world, and New England is a stone’s throw away from the most prolific natural gas resource basin in the country — the Marcellus and Utica shale formations in Pennsylvania, Ohio and West Virginia,” Andryszak wrote.  

“Rather than hoping to get their hands on an LNG tanker when in a bind, New England could expand American energy infrastructure and change course for future generations.” 

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

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[Tom Nolan + 2,441]

Monday Oct 17, 2022 EUROPE

Natural gas futures linked to TTF, Europe's wholesale gas price, were trading around the €130 per megawatt-hour mark, a level not seen since late June, as abundant supplies of LNG, particularly from the US, helped countries fill storage sites ahead of the winter session. Europe's gas storage sites are more than 91% full, above the five-year average, while Germany's stockpile rate reached 95%. On top of that, forecasts for a milder winter, with above-normal temperatures during the peak heating season between December and February, could suggest lower heating demand. Meanwhile, the European Union is due to propose new energy measures to tackle the ongoing energy crisis on Tuesday, including a range of options for natural gas price caps. Still, TTF natural gas futures were more than four times higher than average for this time of the year, with risk remaining on the upside amid concerns about further supply disruptions, particularly those from Russia.

UPDATE

UK natural gas futures extended losses below 240 pence a therm on Monday, the lowest in two months and more than 60% below record levels of 640 seen in August, as the UK’s gas storage facilities are 100% filled. Also, French grid operator RTE said it would be possible to export power to Britain during extreme stress as France and the UK don't have their peak times at the exact moment. Elsewhere, Chancellor Jeremy Hunt confirmed that the energy price guarantee, which meant the typical UK household would pay no more than £2,500 per year on energy, will only last in its current form until April next year. Prime Minister Liz Truss had announced an estimated £150bn package to ease the ongoing cost-of-living crisis, including capping domestic energy prices for households at £2,500 for two years while limiting them for businesses.

https://tradingeconomics.com/commodity/uk-natural-gas

https://tradingeconomics.com/commodity/eu-natural-gas

Edited October 17, 2022 by Tom Nolan

[Tom Nolan + 2,441]

https://finance.yahoo.com/news/china-halts-lng-sales-foreign-060747417.html

Bloomberg News

Mon, October 17, 2022

China Halts LNG Sales to Foreign Buyers to Ensure Own Supply

[Tom Nolan + 2,441]

REUTERS Monday Oct 17

https://finance.yahoo.com/news/u-natgas-futures-drop-6-123433797.html

U.S. natgas futures drop 6% to 3-month low on milder forecasts

Oct 17 (Reuters) - U.S. natural gas futures dropped about 6% to a three-month low on Monday with a collapse in European forwards to a four-month low and forecasts for milder U.S. weather and lower demand next week than previously expected. U.S. gas futures have already been declining for the past eight weeks on record output and reduced liquefied natural gas (LNG) exports that have allowed utilities to inject much bigger than normal amounts of gas into storage over the past month. Major LNG outages include Berkshire Hathaway Energy's shutdown of its 0.8-billion-cubic-feet-per-day (bcfd) Cove Point LNG export plant in Maryland for about three weeks of planned maintenance on Oct. 1 and the continuing shutdown of Freeport LNG's 2.0-bcfd plant in Texas for unplanned work after an explosion on June 8. Freeport expects the facility to return to at least partial service in early to mid-November. There are at least three vessels currently heading to Freeport, according to Refinitiv data, including Prism Brilliance (expected to arrive Oct. 18), Prism Diversity (Oct. 27) and Seapeak Methane (Nov. 22), prompting some traders to believe Freeport will return in November. Others in the market, however, believe the plant's return will be delayed. Officials at Freeport said they remain on track to return the plant in November. U.S. LNG exports could start to rise later this week if Cove Point returns to service as some traders expect. Front-month gas futures for November delivery fell 37.3 cents, or 5.8%, to $6.080 per million British thermal units (mmBtu) at 8:57 a.m. EDT (1257 GMT), putting the contract on track for its lowest close since July 8. Last week, speculators cut their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for the first time in seven weeks, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. In bets the weather will be colder in December and next winter, the premiums of futures for December 2022 over November 2022 and November 2023 over October 2023 both jumped to record highs. Despite weeks of declines, U.S. futures were still up about 62% so far this year as soaring global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's Feb. 24 invasion of Ukraine. Gas was trading at $38 per mmBtu in Europe and $35 in Asia. That puts European forwards down about 8% for the day and on track for their lowest close since June 16 as strong LNG imports boosted the amount of gas in storage in Northwest Europe to healthy levels above 90% of capacity. European prices hit an all-time high of $90.91 on Aug. 25. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.6 bcfd so far in October, up from a monthly record of 99.4 bcfd in September. On a daily basis, however, output fell by a preliminary 2.7 bcfd on Oct. 14 and rose by a preliminary 2.0 bcfd on Oct. 15. If those numbers hold, they would be the biggest one-day output decline and increase since February. But, preliminary data is often revised. With milder weather coming, Refinitiv projected average U.S. gas demand, including exports, would fall from 100.3 bcfd this week to 94.9 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Friday, while the forecast for next week was lower. The average amount of gas flowing to U.S. LNG export plants fell to 11.0 bcfd so far in October from 11.5 bcfd in September. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG. Week ended Week ended Year ago Five-year Oct 14 Oct 7 Oct 14 average (Forecast) (Actual) Oct 14 U.S. weekly natgas storage change (bcf): +104 +125 +91 +73 U.S. total natgas in storage (bcf): 3,335 3,231 3,448 3,525 U.S. total storage versus 5-year average -5.4% -6.4% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2021 (2017-2021) Henry Hub 6.16 6.45 5.57 3.73 2.89 Title Transfer Facility (TTF) 37.99 40.38 30.84 16.04 7.49 Japan Korea Marker (JKM) 32.25 34.84 33.22 18.00 8.95 Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year Norm Norm U.S. GFS HDDs 164 169 130 152 164 U.S. GFS CDDs 29 34 29 38 32 U.S. GFS TDDs 193 203 159 190 196 Refinitiv U.S. Weekly GFS Supply and Demand Forecasts Prior Week Current Week Next Week This Week Five-Year Last Year Average For Month U.S. Supply (bcfd) U.S. Lower 48 Dry Production 99.7 98.3 98.8 94.2 87.0 U.S. Imports from Canada 7.8 7.1 7.7 8.1 7.7 U.S. LNG Imports 0.0 0.0 0.0 0.0 0.1 Total U.S. Supply 107.4 105.4 106.5 102.3 94.8 U.S. Demand (bcfd) U.S. Exports to Canada 2.5 2.2 2.3 1.9 2.4 U.S. Exports to Mexico 5.6 5.6 5.6 6.0 5.3 U.S. LNG Exports 11.0 11.2 10.7 10.6 5.6 U.S. Commercial 6.2 8.4 7.6 6.5 6.8 U.S. Residential 6.7 11.0 9.6 7.5 7.3 U.S. Power Plant 31.9 31.8 29.9 27.4 29.0 U.S. Industrial 21.8 22.9 22.0 21.6 21.8 U.S. Plant Fuel 4.9 4.9 4.9 4.9 4.9 U.S. Pipe Distribution 2.0 2.2 2.0 2.2 1.9 U.S. Vehicle Fuel 0.1 0.1 0.1 0.1 0.1 Total U.S. Consumption 73.6 81.3 76.2 70.2 71.8 Total U.S. Demand 92.5 100.3 94.9 88.7 85.1 U.S. weekly power generation percent by fuel - EIA Week ended Week ended Week ended Week ended Week ended Oct 21 Oct 14 Oct 7 Sep 30 Sep 23 Wind 11 11 9 10 8 Solar 3 4 4 3 3 Hydro 5 5 6 5 5 .............

[Tom Nolan + 2,441]

US natural gas futures slumped almost 7% to $6/MMBtu on Monday, the lowest in three months, amid record domestic production levels and lower weather-driven demand. The latest EIA report showed that US utilities added 125 billion cubic feet (bcf) of gas to storage last week, which is much bigger than usual and above market expectations of a 123 bcf build. It was the fourth consecutive week of increases above 100 bcf due to mild weather and an increase in wind power. Meanwhile, average gas output in the US Lower 48 states rose to 99.9 bcfd so far in October from a record 99.4 bcfd in September, according to Refinitiv. Also, weighing on gas prices was a drop in demand from power outages due to Hurricane Ian and reduced LNG exports.

https://tradingeconomics.com/commodity/natural-gas