Infrastructure trends power our bullish oil & natural gas outlook

(Oil & Gas 360) – Infrastructure Trends Power Our Bullish Oil & Natural Gas Outlook Because Expectations Are Extra Low But Cold Air Definitely Exists.  

While Summer 2024 was warmer than normal, cool air existing dropped the Henry Hub spot price from $2.80 down to $1.80.  Winter 2023/24 delightfully mild greatly  minimizing natural gas demand resulted in a warmer-than-normal April (Figure 1, line, right scale) deflating the Henry Hub spot market price of natural gas below $1.40 per mmBtu (bold line, left scale).  However, warmer-than-normal continuing in May needing more electricity gas generated tugged it up to $2.80 in mid-June.  However, Figure 3 is temperature data for the West South-Central Region, and most of July cooler than normal deflated it to $1.80.  Warmer than normal again in September tugged it up toward $2.80 but warm persisting minimizing heating demand dropped it below $1.40 as November began.

And despite all but one week since mid-September warmer than normal, cold air on its way has the price up to $3.35 today, despite this week warm and heading to Thanksgiving-Day Holiday shutdowns.  Of the 10 weeks since mid-September only one, in mid-October was colder-than-normal (Figure 2, line, right scale).   The natural-gas-heat weighted temperature 4 to 5 °F warmer than normal had the price collapse down toward $1.20.  However, fewer hours of sunlight reducing temperatures, temperatures only around 3 °F warmer and much colder-than-normal air heading South has $3.35 today’s price to get supply.

Hours of sunlight declining reducing temperatures needs more natural gas, despite this week predicted Monday to average 44.4 °F, 2.9 warmer than normal.  Warmer than normal temperatures dominating the Fall-fall and heading to Winter (Figure 3, red line, versus bold dot) have kept the Henry Hub price of natural gas (Figure 2) extra low until this week.  Yet $3.355 was reached despite another mild Winter predicted.  While the notion, that mankind’s CO2 emissions are causing a greenhouse that has mankind heading to disaster is very popular, weekly temperature data shows that cold air hasn’t been CO2’d away.  And, despite all the CO2 emitted, Winter 2005/06 (green-dash) was notably warmer than all the years shown since.  And Winter 2013/14 (red dash) was quite cold.

And while the cold air on its way has tugged the Henry Hub spot price up to $3.355, $2+ more than down near $1.20 November 8, the U.S. Natural Gas Fund has declined today to $13.81, little above $12.53 November 8.  The tug of natural gas demand that tugged the Henry Hub spot price of natural gas up toward $2.80 back at the beginning of October had the United States Natural Gas Fund, LP (UNG) up to a high of $16.80 (Figure 4, red line).  But delightfully dominating deflated the Henry Hub to $1.23 and the UNG to $12.41 (blue line) the first week of November.   And while the Henry Hub price has leaped this week to $3.355, the UNG dropped $1.27 (-8.42%) today to close at $13.81 (bold).

By oilandgas360.com contributor Michael Smolinksi with Energy Directions

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