There's Still Time!: The Beacon, 05/11/2020

Last week, the forward energy market backed off slightly from the rise of the previous week, settling back into familiar territory near the $2.50 mark on all the annual strips. The 12-month and 60-month strips are competing for the best price point, and the 24-month strip is still the most expensive. The range of the annual strips is still very tight - now down to 8 cents between the cheapest and most expensive strips. North American drilling rigs in the field are down sharply for a 8th straight week -- down another 35 rigs this week on the continued oil price collapse, with the US rig count down 34 and the Canadian count down 1. That marks a 567 rig decrease in the last 8 weeks - a 59% decrease from the pre-pandemic/oil price collapse numbers. The EIA reported a natural gas storage injection of 109 bcf -- in the middle of the range of expectations, but well above both the 5-year average build of 74 bcf, and last year's injection of 96 bcf. The relative storage levels have held steady -- we are still almost exactly in the middle of the 5-year avg and the 5-year max, 55% higher than this week last year, and 21% above the 5-year average. This week's weather map is showing colder than normal temps for the eastern 2/3 of the country, and warmer than normal temps expected for the West outside of CA. Current price levels are still roughly where they were in Q4 2019, and longer term contracts are priced very attractively. Keep working to contract open positions and generation projects to take price risk off the table.

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