The CME/NYMEX Henry Hub prompt natural gas futures prices have been relatively rangebound this injection season and have averaged around $2.60/MMBtu since June — a third or less of where prices stood during the same period last year, in the $7-$9/MMBtu range, and at or below most natural gas producers’ breakeven costs. Yet, this is a much rosier scenario than it could have been considering that the first quarter of 2023 was one of the most bearish in over a decade and led to a massive storage surplus vs. last year that persisted through much of the summer. Since setting the year-to-date monthly average low of $2.19/MMBtu in April, prompt futures rose to an average of nearly $2.50/MMBtu in June, ~$2.65/MMBtu in July and August, and have mostly stayed in the $2.50-$2.75 range in September to date. In today’s RBN blog, we break down the factors that kept prices from unraveling this injection season to date and the implications for the rest of the shoulder season.
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In our Top 10 Prognostications of 2023 blog, published on the first business day of the year, we predicted that the 2023 hiatus on new LNG export capacity additions would trigger an oversupplied gas market this year — the kind that defined the Shale Era — albeit the last one we’re likely to see for some time. Production had rebounded from December’s Winter Storm Elliott to the 100-Bcf-plus level, which was more than 6 Bcf/d higher than a year ago at the time. Freeport LNG was still offline following a fire in early June 2022, the timing of its return was uncertain, and the next tranche of new export capacity was not due for another year at the earliest. But, as it turned out, LNG wasn’t the only — or even the biggest — bearish demand factor that trounced gas prices early this year. What we didn’t know when we published that blog was that January and February — typically among the coldest, highest-demand months of the year — would be among the warmest on record, particularly for the Eastern U.S., and result in one of the most bearish starts to a new year that the market had seen in over a decade (which we chronicled in The Final Countdown).
Figure 1. CME/NYMEX Henry Hub Prompt Gas Futures Price History. Source: Bloomberg
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About the song
“Hold the Line” was written by David Paich and appears as the fourth song on side two of Toto’s debut album, Toto. Released as the band’s debut single in October 1978, it went to #5 on the Billboard Hot 100 Singles chart and has been certified 2x Platinum by the Recording Industry Association of America (RIAA). The song was recorded at Studio 55 in Los Angeles and featured Bobby Kimball on lead vocals. Personnel on the record were: Bobby Kimball (lead, backing vocals), Stev Lukather (guitar, backing vocals), David Paich (keyboards, backing vocals), Steve Porcaro (keyboards, backing vocals), David Hungate (bass), and Jeff Porcaro (drums, percussion).
The album, Toto, was recorded between October 1977 and June 1978 at Sunset Sound and Studio 55 in Los Angeles and Davlen Sound Studios in North Hollywood with the band producing. Keyboardist David Paich wrote all the songs on the album. Released in October 1978, it went to #9 on the Billboard 200 Albums chart and has been certified 2x Platinum by the RIAA. Four singles were released from the LP.
Toto is an American rock band formed in Los Angeles in 1977 by session players David Paich and Jeff Porcaro, who formed the band with fellow session musicians Steve Lukather, David Hungate, and Bobby Kimball. Thirteen members have passed through the band since its formation. They have released 14 studio albums, seven live albums, 19 compilation albums, one soundtrack album, and 65 singles. They have sold more than 40 million records worldwide and the band has won six Grammy Awards. They continue to tour with original members Paich and Lukather, along with five touring musicians, including multi-instrumentalist Warren Ham. Ham is filling in for Paich who is currently medically unable to tour. They begin a European tour in November 2023. Original drummer Jeff Porcaro died in Los Angeles in August 1992 at the age of 38.
Comments
How much more wind MW installed summer vs summer? Was mot expecting to see wind generation that much lower and more than offsetting new wind installations.
Is this lower capacity factor to be expected as new wind is installed in less than prime areas or a reflection of the difficulty in projecting wind energy production?