Webinar Analysts: Think Spring, Freeport’s Return, MISO and PJM Updates
During the February Constellation monthly Energy Market Intelligence Webinar, the commodities management group (CMG) team covered a wrap up of winter, continuing inflation watch, natural gas fundamentals and updates on regional ISO markets California, PJM and MISO.
Chief Meteorologist Dave Ryan kicked off the webinar by putting the proverbial bow on winter, which has been expected to finish as the 6th warmest winter since 1950. Dave expects the same general pattern to continue through March and April with warm weather continuing through a majority of the lower 48. An early look at summer shows that water temperature in the Pacific is warming, the result of this could be a much cooler and wetter summer than recent years.
All Things Economic
Moving to the economy, Chief Economist Ed Fortunato covered his outlook on the economy as inflation and recession stays on top of everyone’s mind. One of Ed’s favorite indices for inflation has been the price of oil. The WTI crude oil monthly prices and S&P GSCI have moved in near lockstep for 30+ years. Fortunato noted that currently, oil prices are low but a rally in oil prices could force the Fed to continue raising interest rates. January also showed a strong jobs growth, along with stabilizing home prices are showing signs that the chance of recession is reducing.
Natural Gas Supply & Demand Fundamentals
CMG experts Keith Poli & Bill Sticka moved on to natural gas production which has averaged 98.5 Bcf/d month to date. The EIA’s Short-Term Energy Outlook (STEO) estimates that production will average around 100-101 Bcf/d. Contributing factors to this estimate is that E&P firms reduced gas rigs for the first time since October 2017, while adding the most oil rigs in a week since June. With low gas prices and intermittent freeze-offs waning, our experts will be keeping an eye on producers’ actions moving forward. Moving to storage, warm weather continues to contribute to near record low gas burns which has increased end-of-season storage from 1.5 Tcf to 1.8 Tcf. The warm weather has also benefitted LNG cargoes as European and Asian demand has been greatly reduced. Finally, Freeport LNG has submitted paperwork to restart train 3 and says that trains 1&2 could be restarted within a few weeks.
Moving on to some specific regions, Keith Poli started out west in California, continuing to monitor water levels as reservoir levels have risen to almost 95% of historical levels. In good news for natural gas, the El Paso Pipeline Line 2000 has been greenlit to return to normal operating flows and pressure, however, SoCalGas announced that Line 235 was shut down for unexpected maintenance, analysts expect this shutdown to net out any gain the Line 2000 greenlight provides. Moving east, MISO and PJM expert Bill Sticka, covered the MISO 2023/24 planning resource auction and the various factors affecting the auction. In PJM, the 2024/25 auction has been paused as participants lodge issues with FERC over assumptions made to the PJM models.
Market Trends and Temperature
The team concluded the webinar by looking over NYMEX natural gas prices, forward power charts and introduced a new segment, “Market Temperature,” looking at different factors affecting the energy market.
The team will be taking their winter break in March, but we invite you to join us for our next Energy Market Intel Webinar on Wednesday, April 19th at 2 pm EST, 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.