Webinar Analysts: Summer: Almost Done
During the September Constellation monthly Energy Market Intelligence Webinar, Constellation’s Commodities Management Group (CMG) provided an early winter outlook, potential recession timeline, notable natural gas development and regional highlights.
Weather Outlook
Constellation meteorologist, Colin Eberwein, kicked off the webinar covering the now-passed Hurricane Lee and provided an early outlook into the upcoming winter months. The U.S. is predicted to have a strong El Nino winter, which historically means colder and wetter forecasts for the West and a drier winter for the East.
All Things Economic
Looking at the economy, Chief Economist Ed Fortunato covered the ever-looming threat of a recession, as some key indicators are pointing towards a short and shallow U.S. recession. Fortunato covered energy prices, capital investment, stimulus and consumer confidence as main areas to watch as the U.S. enters into an election year.
Supply and Demand Fundamentals
Moving to natural gas supply and demand fundamentals, the gas storage surplus has been slowly dwindling as the 10th hottest summer on record resulted in high power burns, over 8% year-over-year and 15% higher than the five-year average. On the production side, production has been steady this year, 4.5% higher than last year. However, gas rig counts continue to fall as low prices and declining equipment in the field is not a setup for production gains. The threat of an upside price break could occur driven by anticipated growth in LNG exports and strong power burn demand.
The team also covered oil fundamentals as the oil market has seen a recent price uptick. Oil production has been steady and resilient despite the rig count declines since late 2022. A price surge further into the $90/100’s could support more U.S. supply (as well as associated natural gas production).
Regional Updates
California and Texas dominated the summer energy news headlines, as reliability continues to be top-of-mind for residents and businesses in those areas. In California, the California Public Utilities Commission (CPUC) unanimously agreed to increase the capacity of the Aliso Canyon storage facility as the state and utilities brace for the winter months. In Texas, it is all about renewables and batteries as ten new peak record loads were set over the summer. The team discussed how solar capacity has grown to 12 GW and wind to 35 GW, but grid operators will need to deploy ancillaries (like Regulation and other backup services) in greater quantities as a backstop to renewable generation.
Market Trends and Temperature
The team concluded the webinar by looking at NYMEX natural gas prices, forward power charts, the “Market Temperature,” and other factors affecting the energy market.
We invite you to join us for our next Energy Market Intel Webinar on Wednesday, October 18th at 2 pm ET, where Constellation energy experts offer detailed and timely updates on factors affecting energy prices such as weather, gas storage and production, and domestic and global economic conditions. Register by visiting www.constellation.com/marketintelwebinar