U.S. natural gas prices at the Henry distribution hub surged 6% on Thursday, briefly hitting the $3/MMBtu milestone. This marks a remarkable six-month high and extends a five-day streak of upward movement.
The recent surge can be partly attributed to the expectation of elevated electricity usage spurred by an uptick in air conditioning demand, in response to projections of enduring warm temperatures throughout the remainder of the month.
The surge in natural gas is having an even more pronounced impact in Europe. Dutch TTF prices experienced an astonishing surge of 28% within a single day, marking the most robust daily performance seen since October 2022.
The surge in natural gas prices is influenced by both local and global dynamics.
On the home front, Texas is grappling with yet another week of record-breaking electricity demand. In its recent Short Term Energy Outlook, the EIA projects that U.S. natural gas production and demand will hit all-time highs in 2023. Production could peak at a staggering 103 billion cubic feet per day, while demand could soar to 89.34 billion cubic feet per day.
Internationally, various developments have conspired to exert upward pressure on natural gas prices. Notably, Bloomberg reported that workers at facilities owned by Chevron Corp. (NYSE:CVX) and Woodside Energy Group Ltd. (NYSE:WDS) in Australia have voted in favor of a potential strike. This came a day after Offshore Alliance also voted for a strike potentially impacting the Wheatstone and Gorgon LNG facilities in Australia.
A separate strike vote by Offshore Alliance could also affect the Wheatstone and Gorgon LNG facilities in Australia. Combined, these represent around 10% of global LNG supply.
Goldman Sachs analysts emphasize the critical nature of the situation, predicting that the TTF might rise to 50 EUR/MWh in order to incentivize a reduction in gas consumption. Traders are concerned about the risk of a protracted strike, with Citigroup analysts forecasting that European gas and Asian LNG futures for January may potentially double from here.
5 US Natural Gas Stocks in Focus
Several American natural gas and natural gas liquids (NGLs) producers and exporters saw gains on Wednesday.
Here are a few notable U.S. companies involved in the production and export of natural gas:
- Cheniere Energy, Inc. (NYSE:LNG): Cheniere is a significant player in the LNG sector, with terminals and projects in Texas. It plays a key role in liquefying and transporting natural gas for global markets.
- Chesapeake Energy Corp. (NYSE:CHK): Chesapeake is engaged in oil, natural gas, and NGL production across vital energy-rich regions such as the Marcellus, Haynesville, and Eagle Ford.
- Tellurian, Inc. (NYSE:TELL): Tellurian is active in natural gas production and investment, operating across segments like Upstream, Midstream, and Marketing and Trading.
- Kinder Morgan, Inc. (NYSE:KMI): Kinder Morgan specializes in natural gas transportation and services through its robust pipeline network, contributing to energy movement and carbon capture.
- Antero Resources Corp. (NYSE:AR): Antero Resources focuses on natural gas development, production, and exploration, with operations spanning Exploration and Production, Marketing, and Equity Method Investment in Antero Midstream.
CNBC’s Jim Cramer highlighted Wednesday five companies involved in the liquified natural gas industry that he believes could be worthwhile long-term investments.
When the market gets challenging, investors should look to capitalize by building positions “in companies with exposure to powerful long-term themes, like the rise of LNG. I think this will be one of the best stories of the next decade, regardless of what the Fed’s doing right now or [Russian president Vladimir Putin] is doing for that matter,” said the ‘Mad Money’ host Jim Cramer.
Tellurian is “not expected to begin shipping liquefied natural gas until 2026, but they finally started building their first facility in Louisiana earlier this year. This makes Tellurian inherently speculative, though, and they’ll probably have to do more than one round of fundraising between now and 2026 to keep everything on track. However, the longer Russia’s invasion of Ukraine continues and disrupts European gas supply, the “more realistic” Tellurian’s vision becomes,” said Cramer.
According to CNBC News, Cramer noted in April he encouraged viewers to wait for a pullback in Tellurian shares. At the time, it traded around $6 per share. Now, it’s at $4 per share, and Cramer said he thinks it’s worth buying here. He also noted Cheniere co-founder Charif Souki is also co-founder and executive chair of Tellurian. While Cheniere and Tellurian represent more pure-play LNG companies, Sempra Energy is “more of a diversified utility with a liquefied natural gas export kicker. We’ve got Sempra in the bullpen for the Charitable Trust. … We’re just waiting for a pullback to buy this one because they reported a great quarter. This is the right time to own a utility,” said Cramer.
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