Natural gas futures are up by around 29.1c, near $8.247
- This morning’s rally is largely focused in the front of the curve and is likely being driven by weather forecast changes and the large drop in production
- Summer 22: +21c at $8.271
- Winter 22/23: +16c at $8.028
- Summer 23: +4c at $4.778
- Winter 23/24: +1c at $5.076
- The lower-48 pop-weighted temperature for the 1-15 day range increased by 8.7°F, primarily driven by warmer temps in the Northeast and Rockies regions in the 11-15 day range
- This morning’s pipeline nominations show lower-48 dry gas production is down again by 1.60 Bcf/d week-over-week at 94.57 Bcf/d
- Feedgas demand is down at around 12.5 Bcf/d. Cameron LNG flows increased by 0.3 Bcf/d, but the facility still has a train down for maintenance that should last until around May 20. Corpus Christi LNG nominations are reduced still, near last year’s maintenance level, according to Criterion Research
Total Permian oil output will hit record in June – EIA
- Oil output in the Permian, the biggest U.S. shale oil basin, is due to rise by 88 MBbl/d to a record 5.219 MMBbl/d in June, according to the EIA’s Drilling Productivity Report
- EIA data shows that Permian natural gas production will also rise by around 169 MMcf/d
- So far, in 2022, the number of gas-directed drilling rigs has increased by 38%, to 146. Some analysts project the Permian rig count to hit 400 by the end of the year
- AEGIS notes that the Permian is an oil-focused basin that produces almost 14.8 Bcf/d of gas, making it the third-largest gas-producing basin behind the Marcellus/Utica and Haynesville basins.
- Historically, gas production has increased by around 2.7 Bcf/d per 1 MMBbl/d of oil production growth, but that number is closer to 3.2 Bcf/d per 1 MMBbl/d of oil production today, thanks to a reduction in flaring since the last oil production growth cycle
- AEGIS notes that Waha basis prices could come under pressure if production rises and exceeds current takeaway capacity. To read more about Waha prices, click here