WTI Recovers A Bit — January 31, 2023

The Far Side: link here.

Active rig: 46.

WTI: $78.60.

Natural gas: $2.676.

Wednesday, February 1, 2023: 1 for the month; 71 for the quarter, 71 for the year
39075, conf, Crescent Point Energy, CPEUSC Szarka 3-36-25-159N-100W-MBH,

Tuesday, January 31, 2023: 70 for the month; 70 for the quarter, 70 for the year
39043, conf, CLR, Kelling 3-4H, 

RBN Energy: bearish 2023 gas market punctuates last throes of shale era abundance. Archived.

The Lower 48 natural gas market has had the most bearish start to a new year in a long time. Production has been at record highs, an exceptionally warm start to January suppressed demand, and LNG exports have been hobbled since last June when Freeport LNG went offline.

The CME/NYMEX Henry Hub February gas futures contract slid to an 18-month low of $2.94/MMBtu last Thursday and expired Friday at $3.109/MMBtu, down 54% from where the prompt contract closed just two months earlier. The March contract extended the slide Monday to a 20-month low of $2.677/MMBtu. Freeport’s eventual return will restore existing export capacity, but there’s no new LNG export capacity due online this year — for the first time since 2016. After one of the tightest gas markets of the last decade in 2022, the stage is set for one of the most oversupplied markets we’ve seen in years.

But the bulls out there can take solace: 2023 will also mark the final throes of the kind of oversupply conditions that defined the Shale Era as we know it. In today’s RBN blog, we discuss how we got here and RBN’s outlook for natural gas supply and demand.

After a great re-cap of 2022 - 2023 -- and it's only January, 2023 -- RBN Energy concludes with this:

That’s 2023. Earlier we promised the bulls among you some good news, however, and here it is:

While 2023 is set up to be overwhelmingly bearish, it’s likely to be the last of its kind for some time to come.

After a slowdown in 2022-23, LNG export capacity additions will come fast and furious over the next several years.

As they do, they will outpace production growth, which will increasingly depend on pipeline expansions.

In other words, 2023 will be the last aftershock of Shale Era surpluses, as the Lower 48 gas market counts down to the next phase: a period of gas shortage and increased volatility, driven by export growth and piecemeal production growth that will be paced by the timing of midstream development.

We got a taste of what that will look like in 2022, but how out-of-whack could the market get? We’ll be back with a more detailed look at our five-year outlook in the next episode of this series.