Discussion in 'Commodity Futures' started by themickey, Nov 4, 2019.
Suspect Gas has bottomed and on the way up again, Northern winter as well helps.
Signs are bullish.
I think the chart is definitely looking better and the forecasts are for colder November. We actually just wrote an in depth piece on natural gas, chart and fundamentals.
Permian Basin natural gas prices up as a new pipeline nears completion
Source: U.S. Energy Information Administration, based on Natural Gas Intelligence
Natural gas spot prices at the Waha hub in western Texas, located near Permian Basin production, settled at $1.55/million British thermal units (MMBtu) on August 15, the highest price since March 2019. This price increase coincides with the 2 billion cubic feet per day (Bcf/d) Gulf Coast Express Pipeline (GCX) preparing to enter service. GCX will provide much-needed additional natural gas takeaway pipeline capacity from the Permian region of western Texas and southeastern New Mexico.
Limited natural gas pipeline takeaway capacity from the region has kept prices very low, or even negative, in recent months. During the first eight months of 2019 (through August 19), the Waha spot price averaged just 65¢/MMBtu. The Waha spot price has been consistently lower than the Henry Hub spot price—the national benchmark price for natural gas.
However, in recent days, that differential has significantly decreased, and Waha spot prices posted 59¢/MMBtu lower than the Henry Hub spot price last Thursday, which was the lowest daily differential since January. In comparison, this differential averaged between $2/MMBtu and $3/MMBtu between March and June of this year.
This recent uptick in the Waha natural gas price coincides with flows on the GCX. Deliveries into the pipeline began on August 8. S&P Global Platts reported that deliveries at El Paso Natural Gas Pipeline’s interconnection with GCX reached nearly 0.26 Bcf/d on August 14.
Industry reports suggest that this level means that GCX is packing its lines in anticipation of entering service late next month, ahead of its announced in-service date of October 1. Once fully operational, the pipeline will be capable of sending about 2.0 Bcf/d of natural gas eastward to the Agua Dulce receipt point near the Texas Gulf Coast.
Source: U.S. Energy Information Administration
Note: LNG is liquefied natural gas.
The Permian Basin in western Texas and southeastern New Mexico has seen large increases in natural gas production in recent years. Natural gas produced in the Permian Basin is largely associated natural gas, which is produced as a byproduct of crude oil production. Crude oil takeaway capacity in the region expanded in early 2019; however, GCX is the first addition to takeaway capacity for natural gas since this date. Producers in the region may vent or flare limited volumes of natural gas, and the Texas Railroad Commission regulates these activities.
After GCX enters service, several additional new natural gas pipelines are currently planned from the Permian to the Gulf Coast, which may further reduce the Waha-Henry Hub price differential. These projects include
The Permian Highway Pipeline (2.1 Bcf/d)
The Whistler Pipeline (2.0 Bcf/d)
The Permian 2 Katy Pipeline (1.7 Bcf/d to 2.3 Bcf/d)
The Pecos Trail Pipeline (1.9 Bcf/d)
The Permian Global Access Pipeline (2.0 Bcf/d)
The Bluebonnet Market Express Pipeline (2.0 Bcf/d)
The Permian Pass Pipeline (2.0 Bcf/d)
Of these additional projects, currently only the Permian Highway Pipeline and the Whistler Pipeline have reached a final investment decision (FID) and are currently scheduled to enter service in 2020 and 2021, respectively. These projects plan to serve growing natural gas demand along the Gulf Coast, in particular at liquefied natural gas export facilities.
Principal contributor: Mike Kopalek
I'm currently entered on a 'catch a falling knife/bottom fishing' position on a Canadian Co which claims that pipeline capacity is constrained as well.
"The Canadian Exploration & Production space continues to be challenging with Montney producers struggling with short-term weakness in gas prices caused for the most part by bottlenecks in pipeline capacity. New pipeline capacity matched with increasing domestic demand is predicted to result in better balance between supply and demand during 2020. This should reduce the discounts currently being applied to gas in Western Canada".
I noticed, for a November, these appear to be the lowest gas prices ever, I'm using ETF 'UNL'.
Jerry Jones picked the bottom.
Please tell more
Jerry Jones spent $620M for North Dakota gas fields in 2018 and in June of 2019 he invested $475 million of his own money to help Comstock Resources Inc. buy a larger shale-gas rival, Covey Park Energy, for about $1.6 billion.
That’s a big bet on Natural Gas.
Just about all of US coal fired power plants have converted to NG fired generation. In 2016 half of US coal companies had declared bankruptcy, and some giants like Murray declared bankruptcy in 2019.
Dang, oil & gas flipped bearish agin, same with base metals but general mkt ok atm.
I'm expecting chop ahead.
Global LNG poised for terrible year as supply floods market
Stephen Stapczynski, Anna Shiryaevskaya and Naureen S. Malik
Jan 25, 2020 — 6.01am
Liquefied natural gas prices are poised to test record lows this year thanks to an onslaught of new supply and warmer winter temperatures curbing consumption.
The startup of new export projects from Australia to the US has flooded the market, while brimming stockpiles in Europe and an expected slowdown in Chinese demand have dumped cold water on consumption prospects.
"The global oversupply of LNG has been building and building and building," said Ron Ozer, founder of gas-focused hedge fund Statar Capital in New York. Bloomberg
LNG for spot delivery to North Asia is on track to hit an all-time low this (Northern Hemisphere) summer, while gas prices in Europe and the US are trading at the weakest seasonal levels since 1999.
"The outlook for natural gas over the next year or so isn't great," said Marco Dunand, chief executive officer of trading house Mercuria Energy Group. "There's a surplus already in the US and Europe. And the mild winter in Asia means another surplus is building up there," he said in an interview. Mercuria jumped into LNG trading last year with hires from EDF Trading.
This is what the rock-bottom prices mean for the industry:
US gas exports have surged amid the nation's shale boom, but plummeting prices may now throttle back shipments or encourage sustained maintenance while firms weather the storm. Producers and companies with off-take agreements may decide not to load cargoes because prices are too low to earn a profit after accounting for shipping costs.
"The global oversupply of LNG has been building and building and building," said Ron Ozer, founder of gas-focused hedge fund Statar Capital in New York. "The gas market can't stomach the oversupply and warm weather, and it's getting both."
With cargoes from the Gulf of Mexico currently priced around $US2.65 per million Btu, cash margins are positive only because of weak US benchmark prices, according to Robert Sims, an analyst at Wood Mackenzie. There's a chance that production could be reduced if the spread between benchmark Henry Hub and US Gulf LNG narrows 25 cents, he said.
Torbjorn Tornqvist, chief executive officer of Gunvor Group, the biggest independent LNG trader, sees the market about 50 cents away from shut downs.
"We can see even lower prices in the next few months," Tornqvist said in an interview this week in Davos. "The supply and demand balance doesn't look good."
US cargoes are seen least profitable in Asia in April, and in Europe in July, Anna Borisova, analyst at BloombergNEF in London, said.
Buyers may demand revisions to long-term supply contracts, such as better pricing or the removal of restrictions on reselling cargoes. Japan's Osaka Gas has already taken action, moving an Exxon Mobil-led LNG joint-venture to arbitration in a bid to get lower rates.
Qatar, one of the world's biggest suppliers and traditionally the strictest when it comes to pricing, may be showing some flexibility.
The supplier has started offering more competitive price links, with the lowest seen to Korea Gas at 10.8 per cent the price of oil, according to FGE, an energy consultant. That compares to 2008, when Qatar signed contracts with Chinese firms in the 16 per cent range.
After four years of belt-tightening, the amount of investments last year in new production capacity set a record. Companies including Qatar Petroleum, Novatek PJSC and Venture Global LNG sanctioned new plants from the US to Russia.
But the current wave of additional supply and persistent weak global prices is challenging new projects seeking final investment decisions, according to Morgan Stanley.
The bank reduced its outlook for the number of projects reaching FID and revised lower its new supply outlook for the middle of the decade. The low price environment will also likely force Qatar to stagger or postpone its planned 64 per cent capacity expansion, currently scheduled by 2027, according to FGE.
Weak prices mean more pain for global energy majors including Total and Eni, who have seen profits from gas-related businesses dwindle. Some European utilities -- who face mounting criticism for their use of fossil fuels -- may decide to follow peers that are ditching LNG altogether.
Denmark's Orsted cited loss-making LNG operations for its decision to sell the business to Glencore at the end of last year, while Spain's Iberdrola completed its exit this month.
The Sunnier Side
Royal Dutch Shell, the biggest trader of the fuel, has been able to stave off losses on LNG through contracts linked to oil, while leveraging the weak spot market.
Most long-term LNG contracts are linked to the price of crude, which puts them about twice as expensive as prompt cargoes sourced on the spot market.
The world's biggest importers of LNG, Japan's Jera and Korea Gas, will benefit from lower prices and may be encouraged to shift more of their procurement to the spot market.
Jera gets about 20 per cent on spot or via short-term contracts, which run four years of less. That compares with an average of 32 per cent across global LNG trade. Korea Gas bought about one-quarter of its imports on a spot basis in 2018. Still, the firms' upside is limited as they will source most of the remainder through oil-linked contracts.
India's transition toward gas may get a boost, as the nation's price-sensitive buyers are poised to pick up more cargoes from the spot market, Morgan Stanley analysts said in a January 16 note.
Beneficiaries of the transition are gas aggregators like Gail India and Petronet LNG and city gas distributors, according to the bank.
The huge limit orders look like profit targets of big sellers. We may have a short covering rally sooner or later.....
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