Natural Gas: EIA Weekly Update as Front Month Pokes Above $2.00
The thesis for $3.50 Henry Hub is looking more and more realistic.
Actually I hate it when I am presented with investment "theses". Please take your 85-page report away and come back and tell me: "What's the upside, what's the downside, what's the timeframe."
(a very wealthy gentleman to a much younger me, tough love but it stuck)....
*****
...Looking back, it probably wasn't so much tough love as an attempt to get
this buzzing mosquito (moi) to stop talking for one minute, On the
other hand, this is tough love, for the shorts:It might take some buying oomph (technical term) to take and hold $2.00, there is some congestion on the chart, but when (if) that happens it should be clear sailing to that December gap between $2.25 and $2.35.
Front futures 1.9650, up 0.0160 (0.82%) after trading as high as $2.016.
*****
And now, June futures up 0.1140 (5.72%) at $2.1070.From S&P Global Platts, May 4:
Oil producers in North America have announced vast cuts in output, led by ConocoPhillips, ExxonMobil and Chevron. Plus, contrasting gas market signals from both sides of the Atlantic, Brazilian corn exports under pressure and more, in S&P Global Platts editors’ pick of key trends in energy and commodities this week.1. North American crude output set to decline in reaction to low oil prices…
What’s happening? Global oil companies have announced production cuts of roughly 4 million b/d in response to a collapse in prices. Of that total, around 1.8 million b/d has been announced by producers focused in the US and Canada, with ConocoPhillips, ExxonMobil and Chevron leading the way. Production cuts could even be higher, as only some of the dozens of companies announcing spending cuts have detailed their output plans.
What’s next? Crude futures have found some support from the cuts, but the NYMEX front-month contract is still lingering below $20/b. The market will likely need to see more cuts to push prices substantially higher, whether from oil companies, or from OPEC and its allies, which have pledged cuts totaling 9.7 million b/d for May and June.
2. Falling rig count, bearish crude support US gas prices…
What’s happening? Despite US natural gas in storage sitting nearly 20% above the five-year average with hefty builds on the horizon likely, Henry Hub futures continue to strengthen as the prompt month approaches the $2/MMBtu mark. As US states discuss plans to begin easing restrictions related to the coronavirus pandemic, demand may see some upside throughout May, cutting into the storage surplus.
What’s next? Weak oil prices and declining rig counts also present a bullish risk to prices at Henry Hub for the second half of the year. Associated gas production is already showing declines. Total US production has averaged 92 Bcf/d the past 10 days, 300 MMcf/d below the April 1 through 20 average. The Bakken and DJ Basin lead US fields in recent declines, at 300 MMcfd/d and 150 Mcf/d, respectively.
3. … as gas glut sees Gazprom slash exports, sales price outlook....MUCH MORE
HT: ZH
And Thursday, April 30:
Weekly Natural Gas Storage Report April 30, 2020
Following on the Chesapeake news yesterday the chances of the market seeing our $3.50 target later this year improves a bit as pressure for CHK's "production at any costs" approach for making interest payments subsides a bit.
Front futures up 2.5 cents (1.34%) at $1.894....
