April 23, 2020 – Natural Gas Intelligence
Oil Market Collapse Breathes New Life into Natural Gas Forwards; Permian Curve Back Above $1
By Leticia Gonzales
Sparked by an unprecedented downturn in the oil market, natural gas forward prices exploded higher during the April 16-22 period as the prospect of reduced gas production came into focus...
Read the full article here: https://www.naturalgasintel.com/articles/121770-oil-market-collapse-breathes-new-life-into-natural-gas-forwards-permian-curve-back-above-1
...Until now, the Permian gas market, which currently produces close to 12 Bcf/d, has had to ride the “tenuous” line between how much gas is produced, which has remained relatively steady despite the plunging rig count, and the local demand and pipeline takeaway capacity available to absorb it, according to RBN Energy LLC. Producers have navigated the constraints by squeezing more into storage and serving more local power demand where possible.
However, RBN said many producers also have been forced at times to flare more gas or even curtail the less-efficient, legacy drier gas wells that don’t provide the value uplift of natural gas liquids or oil.
“May is going to be interesting to say the least,” RBN analyst Jason Ferguson said. “Prices have dropped to a level where it just doesn’t make sense to produce anything that isn’t hedged and/or committed. That could create some very interesting dynamics in the oil market, with offshoot impacts on natural gas as well.”
