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Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April.
Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity.
In the oil rig basins, producers aren’t rushing to boost oil production, but aren’t scaling back production, either.

Permian producers are not shutting in oil wells with associated natural gas despite the fact that the Texas regional gas price has been stuck at below-zero levels since early March.

Major pipeline operators in the Permian basin haven’t yet seen any effect of the negative gas prices at the Waha hub in West Texas on activity as producers are look to maximize oil realizations at West Texas Intermediate crude prices at above $80 per barrel.

But the U.S. natural gas benchmark, Henry Hub, has been depressed below $2.00 per million British thermal units (MMBtu) since early February due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks.

Natural gas prices at the Waha hub slumped to a negative value of -$2.00 per MMBtu in April as the recent rise in oil prices prompted producers to bring drilled but uncompleted wells online. The Waha hub prices remained below zero for most of March and April amid high production and not enough takeaway capacity.

The price at the Waha Hub rose by $1.25 in the latest reporting week, from -$1.18/MMBtu to $0.07/MMBtu on April 24, only the second day the price was above zero since April 1, per EIA data.

The negative Waha gas prices and the supply glut are creating a problem for Permian producers regarding how they should dispose of part of the excess natural gas output.

…click on the above link to read the rest of the article…

Germany Still Years Away From Replacing Russian NatGas, Official Admits To “Unspoken Strategy To Pay Crazy Prices”

January 26, 2023

Germany Still Years Away From Replacing Russian NatGas, Official Admits To “Unspoken Strategy To Pay Crazy Prices”

Some European politicians and economists are breathing a sigh of relief after mild temperatures, increasing liquefied natural gas shipments, and above-average natural gas stockpiles have so far averted a worsening energy crisis this winter. Other politicians believe the energy crunch won’t be over for many years.

“Gas storage is up and gas prices are down. Inflation is falling and uncertainty is declining,” Deutsche Bank AG wrote in a note this week, adding, “We can afford to be more optimistic.”

As of late, Europe’s biggest economy, Germany, has seen an improvement in business outlook as recession fears recede, according to data from the Ifo Institute, a Munich-based economic researcher.

Ifo President Clemens Fuest told Bloomberg TV:

“The most important risk for the German economy was a gas-rationing scenario … and that risk is off the table now.”

There’s a lot to be happy about in Europe: Dutch front-month NatGas, the continent’s benchmark, slid as much as 5% to 55 euros a megawatt-hour today, the lowest level since late 2021. Prices have collapsed by more than 83% since peaking at 311 euros a megawatt-hour last August.

However, the optimism could be short-lived because Germany is years from entirely substituting Russian NatGas flows with LNG shipments.

Last week, Chancellor Olaf Scholz told Bloomberg that German learned a hard lesson in its addiction for cheap Russian NatGas. He said the country is now rejiggering supply chains that will increase capacity for LNG imports at major ports.

A new report via the country’s Economy Ministry shows Germany will install 56 billion cubic meters of domestic LNG import capacity by 2026. By 2030, capacities will increase to 76.5 billion cubic meters or about 80% of total German NatGas consumption in 2021.

…click on the above link to read the rest…

Global NatGas Prices Sink As Warm Weather Spreads

January 3, 2023

Global NatGas Prices Sink As Warm Weather Spreads

US and European natural gas prices are sliding as warmer weather reduces demand for the heating fuel, and storage levels remain high. Risks of a global energy crisis are diminishing for now — well — that’s until the next cold blast strikes.

The polar vortex that sent much of the Lower 48 into a deep freeze at the end of 2022 ended last week. Now, much of the US will see warmer-than-normal temperatures through mid-Jan.

The National Oceanic and Atmospheric Administration’s latest 6-10 Day Temperature Outlook shows that nearly all Lower 48 will experience above-average weather.

NOAA’s 8-14 Day Temperature Outlook suggests the same.

Weather data via Bloomberg shows Lower 48 temperatures are expected to remain above a 30-year average through mid-month.

And this will reduce heating demand.

US NatGas storage entered into a drawing period in mid-Nov. and has been sliding since.

A weaker heating demand outlook has sent US NatGas prices down nearly 9% to $4.062 per million British thermal units on the New York Mercantile Exchange in early Tuesday trading. Prices are back to levels not seen since early February 2022.

Across the Atlantic, EU NatGas touched the lowest levels since the start of the Ukraine war.

“The risk of extreme market tightness that people were worried about before the winter started seems low now,” BloombergNEF’s Abhishek Rohatgi wrote.

Warmer weather in Europe has eased concerns about blackouts and rationing as stockpiles increase:

In fact, Europe has been able to add more gas into storage in the last few days amid a mix of curbed heating needs and typically lower consumption during the holiday season. -Bloomberg

EU NatGas storage increased last week.

Temperatures across Central EU are expected to hold above seasonal levels through at least the mid-month.

Sign of relief worldwide: NatGas prices slide in the US, EU, and Asia.

…click on the above link to read the rest…

Europe’s Energy Crisis Is Just Getting Started

December 23, 2022

Europe’s Energy Crisis Is Just Getting Started

While Europe managed to fill its gas storage ahead of winter this year, it will have to import huge amounts of LNG in a competitive market to survive next winter.
The next 12 to 24 months will be critical in establishing whether Europe can stave off a long-term energy crisis.
According to the IEA, if Russian gas supply drops to zero and Chinese LNG demand hits 2021 levels, the EU could have a supply-demand gap of 27 billion cubic meters in 2023.

Despite successfully filling its gas storage ahead of winter this year, Europe’s energy crisis is far from over. The situation for Europe could, in fact, be worse next winter when Russian pipeline gas supply will be down to a trickle, at best.

European households and businesses have already seen a rise in total energy costs by $1.06 trillion (1 trillion euros), according to estimates by European economic think-tank Bruegel published by the International Monetary Fund (IMF). According to Bruegel’s analysts, if governments in Europe do nothing except offer financial support, and if they cover the price increases, this sum would represent a massive 6% of the annual GDP of the EU.

“Massive government support could delay adjustment to a new price equilibrium and create the need for even more support,” Bruegel’s experts say.

Instead, the EU needs a “grand bargain” to encourage savings and increase supply at the same time.

The next 12 to 24 months will determine whether Europe will be able to cope with the energy crisis without having to resort to mandatory rationing or without losing too much industry competitiveness.

Europe’s energy systems were already put to the first real test this month amid an Arctic blast that swept through most of northwestern Europe, bringing freezing temperatures, snow in the UK, and depressing wind speeds in Germany.

…click on the above link to read the rest…

Germany Unleashed Half-Trillion Dollar ‘Energy Bazooka’ To Keep Lights On

December 16, 2022

Germany Unleashed Half-Trillion Dollar ‘Energy Bazooka’ To Keep Lights On

Western sanctions on Moscow have backfired, failed to paralyze Russia’s economy, and ultimately sparked financial pain for ordinary Europeans and the largest economy in the block.

According to Reuters calculations, Germany has hemorrhaged cash to the tune of 440 billion euros ($465 billion) in energy bailouts and schemes, as well as keeping energy supplies flowing while it lost access to inexpensive natural gas from its leading supplier Russia in 2022.

“How severe this crisis will be and how long it will last greatly depends on how the energy crisis will develop,” said Michael Groemling at the German Economic Institute (IW). He added: “The national economy as a whole is facing a huge loss of wealth.”

Reuters said the “cumulative scale” of energy bailouts and other schemes employed by Berlin equates to 1.5 billion euros per day since Russia invaded Ukraine, or about 12% of national economic output, or 5,400 euros for each German.

Germany has shown Europe how backfiring sanctions ruin its country’s finances and send millions of its citizens crashing into energy poverty overnight. These anti-Russian measures have caused soaring electricity and NatGas prices and elevated risks of entering a recession in 2023.

“The German economy is now in a very critical phase because the future of energy supply is more uncertain than ever.

“Where does the German economy stand? If we look at price inflation, it has a high fever,” said Stefan Kooths, vice president and research director of business cycles and growth at the Kiel Institute for the World Economy.

Many other European countries find themselves at the mercy of the weather as NatGas injections into EU storage facilities have flipped to draws amid a wicked cold spell boosting heating demand.

“The country has turned to the pricier spot, or cash, energy market to replace some of the lost Russian supplies, helping drive inflation into double-digits,” Reuters noted.

…click on the above link to read the rest…

Europe’s Energy Crisis May Not End Until 2024

October 22, 2022

Europe’s Energy Crisis May Not End Until 2024

The EU gas storage units are nearly full giving some relief to fears of shortages
Challenges remain for the continent’s energy security as winter arrives
The challenges will persist into the winter of 2023-24.

The worst energy security fears of spring and summer as regards the coming winter in the European Union-EU, have been somewhat allayed. Earlier this year when war broke out in Ukraine and it became clear that the conflict would drag on for months, if not years, the EU appeared perilously in danger of a winter “Polar-Geddon,” as cold air gripped the continent. Largely forgotten and retired gas storage caverns, that hadn’t been filled in the expectation of a steady supply from Russia via the Nordstream I and II pipelines, suddenly were thrust front and center into the public eye. Troubles often come in twos. The next shoe to drop was the deflation of expectations of much of the EU electric grid base load being met by wind and solar farms, when the elements refused to cooperate. Beginning in the middle of last year, it was noted that the wind wasn’t blowing and the output of solar farms was less than predicted. These two events appeared ready to converge upon the EU and presenting it with a stark, and chilly future for the winter of 2022-23.

As is often the case, the fullness of time alleviated the worst fears as energy leaders in the countries that make up the EU, sprang into action. They turned to Norway for an additional 90 bn cubic meters of gas to begin filling the storage caverns. The infrastructure was in place, it was just a matter of price…

…click on the above link to read the rest…

Germany nationalizes its biggest natural gas importer

September 23, 2022

Germany nationalizes its biggest natural gas importer

Germany is nationalizing Uniper, its biggest importer of natural gas, as part of an €8 billion ($7.9 billion) plan to prevent an energy shortage this winter.

Europe has been hit by soaring natural gas and electricity prices as a result of Russia’s invasion of Ukraine and its throttling of gas supplies.

The German government will hold around 99% of Uniper after injecting new capital and buying out its Finnish parent company Fortum (FOJCF), German Economy Minister Robert Habeck told journalists in Berlin on Wednesday.

Uniper provides 40% of the country’s gas supply and is crucial for large companies and private consumers in Europe’s biggest economy.

In July, Chancellor Olaf Scholz announced the government would step in to bail out Uniper with a package worth up to €15 billion ($15.3 billion), after it was brought to its knees by months of Russian supply cuts and soaring spot market prices.

Under the rescue deal, the government committed to provide €7.7 billion ($7.8 billion) to cover potential future losses, while state-run bank KfW agreed to increase its credit facility by €7 billion ($7.1 billion).

But Habeck said the situation had “worsened dramatically” since Russia cut off gas supplies to Europe through the Nord Stream 1 pipeline indefinitely on September 1, citing an oil leak.

Russian gas has had to be substituted with costly alternatives, leading to soaring bills for consumers.

Although gas supplies through Nord Stream 1 are suspended, Germany’s gas reserves are filled at more than 90% capacity, European Storage provider GIE AGSI+ said on its website.

Still, the European energy crisis isn’t going away.

Habeck said that the country could “get through winter well” without Russian gas, but warned of “really empty” supply levels in the period thereafter.

…click on the above link to read the rest of the article…

Wave Of European Ammonia Plant Closures To Exacerbate Food Crisis

August 28, 2022

Wave Of European Ammonia Plant Closures To Exacerbate Food Crisis

A wave of European ammonia-plant shutdowns due to soaring natural gas prices has resulted in a devastating fertilizer crunch, worsening by the week, with as much as 70% of production offline.

“Ammonia prices, though volatile, rose 15% in 3Q and could climb higher as Europe’s record gas prices curtail output and send ammonia producers to the global market in search of replacement supplies to run upgrade facilities — with winter still around the corner,” Bloomberg Intelligence’s Alexis Maxwell wrote in a note.

As of Friday, 70% of capacity is offline across the continent, according to Fertilizers Europe, representing top regional producers.

“The current crisis begs for a swift and decisive action from EU and national policymakers for both energy and fertilizer market,” Jacob Hansen, director general of Fertilizers Europe, said in a statement.

Producers from Norway’s Yara International ASA to CF Industries to Borealis AG recently reduced or halted production because European NatGas prices hit a record high of 343 euros per megawatt hour, making it uneconomical to operate.

“We confirm we are reducing and stopping production of some fertilizer plants in the different EU sites and this for economic reasons,” a spokesperson for Borealis AG said.

Europe’s benchmark NatGas price soared nearly a third this week as Russian supplies to Europe via Nord Stream 1 pipeline have been reduced to 20% over the summer and face a temporary halt on Aug. 31 for three days.

The region’s fertilizer industry association warned the energy crisis is rippling across many industries and could heavily impact the food industry.

“We are extremely concerned that as prices of natural gas keep increasing, more plants in Europe will be forced to close.

…click on the above link to read the rest of the article…

European Natural Gas Prices Are 6 Times Higher Than Last Year, And This Is Sparking Widespread Civil Unrest All Over Europe

August 26, 2022

European Natural Gas Prices Are 6 Times Higher Than Last Year, And This Is Sparking Widespread Civil Unrest All Over Europe

This is going to be a bitterly cold winter for a whole lot of people. In particular, things are likely to get really uncomfortable in Europe. Soaring energy prices and concern about potential shortages are causing anxiety all over the continent, and widespread protests have already started to take place. The cost of living has become extremely painful for those on the bottom of the economic food chain, and people want their governments to do something. Of course this is what always happens when nations embrace socialism. There is an expectation that those in charge will solve any and every problem, but this time around the limitations of the socialists running Europe will become very clear.

Thanks to the war in Ukraine and a number of other factors, the price of natural gas in Europe is now approximately six times higher than it was last year…

European natural gas prices are taking a breather amid further signs that soaring energy costs are crippling economic output, heaping pressure on politicians to resolve the crisis with winter just a few months away.

Benchmark futures retreated after settling at a record high on Monday. Prices are still about six times higher than they were at this time last year, with the panic spreading across nations ahead of peak winter demand.

Needless to say, many in Europe are being completely stunned by the size of their energy bills, and a massive backlash has been brewing.

In fact, we are already starting to see very large protests in a number of different countries…

…click on the above link to read the rest of the article…

WTF Just Happened with Natural Gas?

November 17, 2018

WTF Just Happened with Natural Gas?

If you blinked, you missed it.

The price of natural gas for December delivery plunged 19% on Thursday, the biggest percentage plunge since February 2003.

This comes after futures prices had skyrocketed 20% on Wednesday to $4.931 per million Btu intraday, before settling at $4.837, the highest settlement price since February 2014 – when “polar vortex” entered into everyday language in the US. It was a gain of 19% for the day, the biggest percentage gain since 2004. Today’s plunge took the price back to $3.899 at the moment, where it had been on Monday. If you blinked you missed it:

The spike yesterday was driven by “a sharp cold revision in the winter weather outlook,” according to a commodities strategist at Morgan Stanley, cited by Bloomberg. “We see modest downside from here assuming current weather forecasts, but a very wide range of potential short-term prices,” he said.

The weather outlook hasn’t really changed overnight, but instead of a “modest downside” move, natural gas performed a historic plunge today.

Speculative fever goes both ways. Today was impacted more than anything by the hangover from yesterday’s spike that completed a 45% run-up since November 2. Time to cash out.

And then there was the Weekly Natural Gas Storage Report, released this morning by the EIA. It was a cold shower, after the drunken party yesterday.

Turns out, thanks to surging production, 39 billion cubic feet were addedduring the latest reporting week to underground storage facilities across the US. Over the past five years on average – with the colder season having already started at this week in November — natural gas levels in storage would drop by 15.6 billion cubic feet during that week.

…click on the above link to read the rest of the article…

Natural Gas Markets Remain Ultra Tight

November 16, 2018

Natural Gas Markets Remain Ultra Tight

Natural gas prices skyrocketed this week, shooting above $4.80 per MMBtu on Wednesday, a price last seen during the polar vortex of 2014.

Low gas inventories are leaving the market on edge, and volatility has roared back to the market. In this column only a week ago, I marveled at prices soaring to $3.50/MMBtu, which marked a 15 percent increase over the prior two months. However, in the last seven days, prices are up a further 30 percent.

The factors behind the price increase are the same as they have been for quite a while now. U.S. natural gas inventories are at a 15-year low for this time of year, just as we head into the winter drawdown season. U.S. natural gas inventories stood at 3,247 billion cubic feet (Bcf) for the week ending on November 9, or 528 Bcf less than at this point in 2017, and 601 Bcf below the five-year average. In other words, the U.S. has a thin buffer of storage to fall back on in the event of a sudden bout of cold weather.

(Click to enlarge)

And it is exactly that variable that helped spark the most recent rally in prices. Reports that cold weather has arrived in much of the U.S. already, plus indications that the upcoming winter could be an unusually cold one, helped fuel this week’s rally. Natural gas had traded below $3/MMBtu for much of this year, but climbed roughly 50 percent since mid-September.

Just a few weeks ago, Bank of America Merrill Lynch said that given the backdrop of a 15-year low for inventories, any unexpected cold weather could push prices up as high as $5/MMBtu. That may have looked a little aggressive at the time, but now appears rather prescient.

…click on the above link to read the rest of the article…

Natural Gas Skyrockets As China Pledges Huge Supply Boost

November 15, 2018

Natural Gas Skyrockets As China Pledges Huge Supply Boost

With an eye on last winter’s natural gas supply debacle, Chinese state-owned energy giant CNOOC has pledged a 20 percent rise in gas supply, the company said on Tuesday. The company, one of three state-run oil majors, said that it will supply 24.6 billion cubic meters (bcm) of natural gas during the heating season that kicks off this week, up 20 percent year-on-year, to meet rising natural gas demand in the country.

China is in the process of replacing over reliance on coal usage for both industrial and residential end users to offset rampant air pollution, particularly in its larger urban centers. By government mandate, at least 10 percent of the country’s energy mix needed for power generation by 2020 must be natural gas, with further earmarks set for 2030.

CNOOC, the country’s largest oil and gas producer, said 6.1 bcm of natural gas will be supplied to seven northern provinces and municipalities, up 63.5 percent from last year. The company added that most of the natural gas it’s supplying this year is from offshore fields, coal bed gas and imported liquefied natural gas (LNG). According to reports, CNOOC has also been negotiating with LNG suppliers to ensure gas supply, including dealers from Australia, Indonesia, Malaysia, Qatar, Nigeria and Russia. However, due to the ongoing trade war between the US and China, CNOOC spot purchases of LNG is coming to a halt amid Beijing’s retaliatory tariff on US-LNG imports.

LNG tariffs will also come full circle, since other LNG producers will likely increase their spot prices in the mid-term to a point just under US LNG prices including a tariff, with Chinese firms being forced to pay the extra price.

…click on the above link to read the rest of the article…

Natural Gas Inventories “Dangerously Low”

August 26, 2018

Natural Gas Inventories “Dangerously Low”

Futures markets are suggesting the currently benign level of natural gas price volatility may not remain through the winter months.

According to the Financial Times, market volatility this year has been the lowest on record despite inventory levels falling 19.5 percent below average and by the time winter starts are set to be at their lowest in more than a decade.

(Click to enlarge)

Source: Bloomberg (via Financial Times)

The Financial Times puts this down to investors being lulled into complacency by a seemingly unstoppable wave of new supply from the shale market rising inexorably to meet rising demand. The government last week forecast 81.1 billion cubic feet per day in dry gas production for 2018 — a record high — and up by 7.5 billion cu ft/d from 2017, the Financial Times reports.

But is the market safe to assume shale gas will supply regardless of demand?

Natural gas producers are systematically hedging their sales throughout next year, often a sign they plan to continue an aggressive policy of drilling and expansion. That activity has contributed to a dipping of forward prices, as there are more sellers in the futures market than buyers.

But inventory levels are low — some would suggest dangerously low — after a high summer demand due to hot weather increasing demand for air conditioning. Natural gas “power burn” surged to a record 37.7 billion cubic feet per day during July, the Financial Times reports.

Such strong demand comes after a cold winter depleting stocks to unusually low levels. Inventory levels were low at the end of the summer and have not managed to be replaced during the normally slacker summer months. High demand is not helped by exports of natural gas and distillates running at record levels, aided by strong international demand and low U.S. domestic prices relative to global markets.

…click on the above link to read the rest of the article…

Why Natural Gas Prices Will Rise This Summer

March 28, 2018

Why Natural Gas Prices Will Rise This Summer

Record production of natural gas is snuffing out any price rally that might have occurred from the bout of cold weather this winter.

The gas market saw a jolt at the end of December and in early January due to extremely cold temperatures across much of the U.S. This winter was about 13 percent colder than last year, which pushed up residential and commercial gas demand by 3.5 billion cubic feet per day (Bcf/d), according to Barclays.

At the same time, demand continues to grind higher on a structural basis, with more LNG exports leaving U.S. shores and more utilities burning gas for electricity. That led to a sharp drawdown in gas inventories, pushing them 16 percent below the five-year average in the first quarter.

Nevertheless, the price impact was muted. In the past, sever cold snaps have led to sharp price spikes. While that happened in regional spot markets, the price increases were very short-term and nothing like the price increases during the 2014 Polar Vortex. After the cold subsided, Henry Hub spot prices fell back below $3/MMBtu.

Gas traders are so sanguine because the U.S. is producing more natural gas than ever. And 2018 is shaping up to be a record year for new gas output. A mild streak during February eased some pressure on inventories as well.

As a result, the U.S. will likely see “heavy” gas injections during the second quarter, according to Barclays. The bank expects gas inventories to rise at a pace that is 1 Bcf/d higher than last year.

…click on the above link to read the rest of the article…

And You Thought Bitcoin Was Volatile…

December 27, 2017

And You Thought Bitcoin Was Volatile…

If you are one of those people living in the Northeast who likes to keep their home temperature above freezing and waking up without frostbite, we have some bad news…

Another sudden bout of cold weather and LNG prices are soaring more than the seasonal norm.

Your heating bill may have just exploded over 300%…

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