(Oil & Gas 360) – Climate Change To An Overdue Colder Winter Confirms Natural Gas Supply Growth Is Short Of Demand Growth & Needs A Profitable Drilling Boom.
Bullish natural gas inventory data the direction we head is helped by how little natural gas was needed from inventory for the rest of the last several Winters. Weekly natural gas inventory draws last Winter (Figure 10, blue line) and two years ago (bold line) were at the bearish top of the historical range. We credit the inventory draws this Winter (red line) down at the bullish bottom since the year began to 1) cold air and 2) supply growth not keeping up with demand growth. Coulda/Shoulda/Woulda has been dominated by natural gas producers wishing they had sold natural gas in the futures market, where prices have been higher a long time. We predict supply demand infrastructure has it changing to a nice numberer of years of natural gas buyers wishing they had bought natural gas in the futures market.
The number of rigs drilling for natural gas where it has been/is highlights the infrastructure decisions that have natural gas supply growth not keeping up with demand growth. 99 rigs were drilling for natural gas last week (Figure 11, red line). That is 2 fewer than the week before, 21 fewer than last week last year (blue line) and 61 fewer than the 160 drilling at the beginning of 2023, what produced with long lead times, the rapid production growth to the record highs of late.
The Climate Changing to cold temperatures very overdue has conventional energy set up to stock-market outperform, as the low prices that helped the overall market set new record highs changes to high prices powering out performance. Infrastructure decisions and long lead times that will now have natural gas and oil supply not keeping up with demand growth is evident in the very poor performance of the Oil Service Index (Figure 12, bold line). Too little being done. Infrastructure trends needing much more, fossil-fuel production growth pursuit down, Over There growing too, conventional energy still low, prior rulers working to have it slow, + much poorly understood has conventional-energy-Bullish set up. We rate natural gas, crude oil, oil-focused E&P and Drilling & Oil Service Overweight Strong Buy; and Oil-Refining BUY.
By oilandgas360.com contributor Michael Smolinksi with Energy Directions
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