Natural Gas & Electricity Markets

Natural Gas

• U.S. natural gas production is currently holding at 91.5 Bcf per day. Production recovered well from the mid-February event and returned to January levels.
• Rig counts are standing at around 94 rigs in operation, compared to last year at 89.
• Gas storage is at 1,845 Bcf; inventory is neutral going into Summer.
• Prompt month prices have been rising, currently in the $2.70 - $2.75 / MMBtu range.
• LNG exports have been on the rise, as have exports to Mexico. In general, Europe and Asia experienced cold winters. That, along with the increase in Chinese demand, and lower nuclear output will drive higher US LNG exports this summer.

• The mid-February weather event was painful, not only for floating account holders. Large suppliers have billion dollar liabilities that they are looking to cover as well.
• ERCOT forward power strips remain especially elevated. The same forwards are mixed throughout the other ISOs.
• Renewables will dominate new construction for generation in 2021 and for the next several years. The push to reduce carbon and other fossil fuels is real, and government incentives are becoming increasingly available.

• Spring temperatures are expected to rise in the Midwest, Mid-Atlantic, and Northeast toward the end of April.
• For the last week of April, below normal precipitation is expected, with a warmer outlook for the rest of the month.
• The initial outlook for May is warmer temperatures across the country.
• Parts of the Southwest are experiencing significant drought conditions.