Premier Energy Group, LLC

08/23/2022

Natural gas futures for January 2023 have crossed the $10/mmbtu mark. The uncertainty of European supplies is affecting worldwide energy markets. The price for natural gas in Europe has reached over $75/mmbtu the past few days.

Temperatures across most of the US have returned to more normal which has resulted in daily demand for natural gas back near 85 bcf/day. This is down from close to 100 bcf/day during the hottest days this summer.

Natural gas storage in the US is still well below the 5-year average for this time of year and we are likely to enter the heating season with low inventory. A low storage level with early or sustained cold weather is a formula for prices to run.

The Freeport LNG terminal that was closed down in June due to fire is expected to be up and running again in October. This will result in 2 bcf/day of LNG (liquefied natural gas) being exported to Europe and not staying here in the US to meet domestic demand.

We also have the mid-term election coming up in November and the result of this election could also affect energy prices.

We are in uncharted territory with the globalization of natural gas, low storage, increased demand due to coal plant retirements, and a federal energy policy that is not favorable to natural gas. It seems that we are set up for a wild ride this winter.

06/21/2022

Natural gas futures continue to slide off their 12-year highs over the past few days. Prices that were over $9/mmbtu have dropped under $7/mmbtu. This is due to the fire that took place at the Freeport, TX LNG (liquefied natural gas) plant.
This plant was exporting about 2 bcf/day of natural gas to Europe and will become operational again late in 2022. During the interim, this supply will remain in the US. The additional 2 bcf/day of supply will help to fill natural gas storage which is about 15% behind the 5-year average for this time of year.
Do not get complacent with this market as summer heat will put upward pressure on prices. We still have to fill the large storage deficit. We still have a war in Ukraine. We still have an administration that is unfriendly to fossil fuels. We still have inflation.
With each economic report the probability of recession increases. Recession would be bearish for energy prices as recession causes demand destruction.
Even with the recent drop, natural gas prices are more than double where they were 18-months ago.
Today is the summer solstice (the first day of summer). A cool summer is not predicted but would help take pressure off these prices. Stay tuned!

06/15/2022

Natural Gas prices are rebounding after yesterday's considerable drop resulting from a fire at the Freeport, TX LNG (liquefied natural gas) terminal. The latest news on the terminal is that it will be down for months and not weeks as originally reported. This means over 2 bcf of natural gas per day that would have been exported will now stay here in the US helping take some pressure off a very tight supply-demand balance. All other LNG plants in the US are already at full capacity so they cannot pick up any of the slack. This is already causing upward pressure on prices in Europe as they try to find alternatives to replace Russian supply. The forecast for warmer than normal temperatures this summer across most of the US, low natural gas storage inventory and a Federal Energy Policy that is not friendly to fossil fuel production will all keep upward pressure on this market. The lost LNG production for the next few months will help reduce this pressure. This market still feels bullish to me.

02/10/2022

The Energy Information Administration reported a net storage withdrawal of 222 bcf for the week ending February 4, 2022. Natural gas storage is now 17% behind last year and 9% behind the 5-year average. Despite this very low storage we have seen a nice pullback in natural gas prices over the past week. Prices are still well above where they have been over the past 10 years. Natural gas NYMEX futures for March 2022 delivery is currently trading at $3.89/dth as compared to $2.854/dth last year and $1.821/dth in 2020.

02/03/2022

The Energy Information Administration reported a net withdrawal from storage this morning of 268 bcf for the week ending January 28, 2022. Despite this very large withdrawal, the market is giving back most of yesterday's gains. This pullback seems to be mostly related to the cold weather in Texas being less severe than originally expected. Natural gas storage is now 14% behind the same week last year and 6% behind the 5 year average. Low storage levels as we exit the heating season will put pressure on the market through the spring, summer and fall as storage will need to be replenished prior to next heating season.

02/02/2022

Prompt month Natural Gas prices are surging by 15% today as below-freezing temperatures in many parts of the United States stoked demand for heating and electricity. Natural gas for March 2022 delivery is up $0.729/mmbtu to $5.479/mmbtu as of 1:30pm.

There is some panic in Texas as the events of Feb 2021 are still on everyone's mind. Energy infrastructure in Texas is much better prepared for extreme and widespread cold this winter, however a deep freeze that makes its way to the Gulf Coast could still be reason for concern.

Aside from short term weather, there are other drivers for the higher prices. These include significant increases to exports of natural gas (LNG), a Federal Energy Policy that is not friendly to fossil fuels and increasing tensions with Russia over Ukraine.

Natural gas for March 2022 is currently trading at $5.479/mmbtu. The March 2021 expiration price was $2.854/mmbtu and the Mar 2020 expiration price was $1.821/mmbtu.

Natural gas for Feb 2022 expired at $6.265/mmbtu. The Feb 2021 expiration price was $2.760/mmbtu and the Feb 2020 expiration price was $1.877/mmbtu.

Natural gas for Jan 2022 expired at $4.024/mmbtu. The Jan 2021 expiration price was $2.467/mmbtu and the Jan 2020 expiration price was $2.158/mmbtu.

U.S. natural gas demand is expected to increase over the next several days as an Arctic blast spreads south and east out of the Midwest with frigid low temperatures into Texas and the South. Forecasts are for very high natural gas demand from late Wednesday through the weekend.

01/28/2022

The Feb 2022 natural gas futures contract jumped by $1.988/dth (46%) on its last day of trading to settle at $6.265/dth. The contract did trade at a mid-day high of $7.346/dth. This is the highest prompt month settle since Nov 2008 and the largest one day jump on record. The run-up as we headed to the contract expiration seems to have been mostly technically driven with lots of short covering. The fundamentals do also favor higher prices at this time.

We have seen two consecutive weekly natural gas withdrawals in excess of 200 bcf and are expecting a 262 bcf withdrawal next week. We are also expecting more below normal temperatures for the better part of the next couple weeks. The escalating tensions with Russia over Ukraine is adding to the bullish sentiment.

Stay tuned as the next month will be anything but dull.

12/01/2021

NJIT announces deal to purchase renewable energy from Engie North America. Premier Energy Group, LLC is the energy consultant that put the deal together. My partner Joe Santo manages this very important client. We have other large clients working toward similar green initiatives related to procurement of electricity. Great work by Joe, the team at NJIT and Engie as we do our part to make our world a little cleaner.

NC-SmokyMountains-Santeetlah The portfolio consists of four hydropower facilities located along the Little Tennessee and Cheoah rivers in Tennessee and North Carolina, with a total installed capacity of 375 MW. Owned and operated by Brookfield Renewable U.S., one of the largest providers of renewabl...

11/30/2021

Natural gas prices for this heating season plummeted yesterday due to weather models showing a decisive shift warmer. The Jan 2022 futures contract dropped $0.623/dth to $4.854/dth. The Feb 2022 and Mar 2022 futures contracts saw similar drops. As of mid-day today futures prices for these three months are down another $0.20-$0.25/dth. Weather models are continually updated and can shift again so consider buying the dips.

10/26/2021

Natural gas futures rose sharply on Monday as the weekend weather forecast shifted to much colder. This run was also fueled by a sharp increase in liquefied natural gas (LNG) demand and the upcoming contract expiration. The November NYMEX gas futures contract jumped $0.618 to $5.898/dth. The December 2021 futures contract rose by $0.595/dth to $6.056. Spot gas prices also started off the week moving higher as multiple weather systems tracked across the United States.

With the weather models starting to show signs of cooler air infiltrating the Lower 48, the bulls were quick to jump on the data. The latest weather forecast isn’t all that bullish. The additional demand reflected in the weather models simply aligns more with historical levels. The reaction seems to be due to the step change in the pattern compared to how warm it has been. There is risk that weather shifts a little colder yet.

Some analysts are predicting that Crude oil could hit $100/bbl and natural gas prices could double if the winter turns out cold.

Please call or email if you would like to discuss your specific natural gas or electricity needs. Scott Fawcett Phone: 732-302-0608. email: [email protected].

10/05/2021

Prompt month natural gas for Nov 2021 is up over $0.40/dth today.

09/09/2021

Natural gas futures are slightly lower this morning as we await the release of the government’s weekly storage report at 10:30 AM Eastern Time. October 2021 futures are currently trading at $4.90/dth and Jan 2022 futures are currently trading at $5.10/dth.

On Wednesday, the market surged to 7 year high, led by a number of factors including soaring cash prices, forecasts for the return of summer heat, strong LNG demand, and continued production outages in the Gulf of Mexico following hurricane Ida.