Cooking With Natural Gas March 16 2023

The Energy Information Administration released their weekly report Thursday.

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The current storage is near the high end of 5 year average, for this time of year. That is a good thing, but we should soon enter into a storage growth period.

Of course, it varies by region...

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Mountain and Pacific regions are still down, and has been reflected by their prices over the past few weeks. The good news, is those prices are falling. 

The price at Sumas on the Canada-Washington border, the main pricing point in the Pacific Northwest, fell $3.74 from $7.16/MMBtu last Wednesday to $3.42/MMBtu yesterday. 

The price at Malin, Oregon, the northern delivery point into the PG&E service territory, fell $1.48 from $7.52/MMBtu last Wednesday to $6.04/MMBtu yesterday, leading to a $1.86/MMBtu decline in the price at the PG&E Citygate in Northern California from $8.80/MMBtu last Wednesday to $6.94/MMBtu yesterday. 

So the U.S. is starting to look good. HOWEVER, storage contains natural gas that was priced at much higher rates. While most futures are substantially down, that higher priced NatGas in storage will prop up energy prices to the consumer. They should trend downward from here. How long that takes... I don't know. 

The same situation is seen in UK and EU. However prices are still elevated and will likely remain elevated. There should be some easing to the consumer, but not sure that will happen this year. 

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An example might be the UK pricing. It will likely never return to February 2021 levels, unless Russian NatGas returns to the market. Not looking likely.

The UK had an outlook of £3,600~£5,500 late last summer and settled on a cap of £2,500. Current outlook is £1,700~£2,300. The cap remains in place, as the average price in storage... exceeds that cap.

That remains the situation in much of the EU. It will take a long while to recapture the excessive inventory costs of stored Natural Gas. 

In short, the outlook for EU and UK natural gas futures are in the current range. Same for the U.S. 

As for the U.S. consumer, it is not out of the realm of possibility, that lower natural gas prices will slowly trickle through the system and maybe return to levels of 2 years ago, by end of the year... hopefully.

The EU and UK will not see a return to levels of 2 years ago. Maybe a reduction of 10% sometime by end of the year. 

In any case, I have said my piece and will take a break from writing about natural gas... and partake of something, which will give me that other natural gas.