Mix of Factors Set to Clarify Natural Gas Demand Outlook

Mix of Factors Set to Clarify Natural Gas Demand Outlook
Here is a preview of what to watch in the oil and gas markets this week.

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)

Fallout from the recent Texas freeze, tight petrochemical feedstocks, and the loosening of coronavirus restrictions in the United States should contribute to a better understanding of natural gas demand in the months to come, according to two of Rigzone’s regular market-watchers. Read on for their explanations, along with other insights, in this installment of what to watch this week in the oil and gas markets.

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: Petchem pricing is quietly reaching multi-year records, and this will likely support gas prices as the respective natural gas liquids (NGL) volumes are pulled out of stream. There has been so much noise around gas pricing through the winter that, as we get into shoulder season, we should get a better sense for how much of this demand there is.

Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: U.S. production of crude should return to the pre-storm levels of about 11 million barrels per day (bpd) while higher prices should spur limited, but steady, activity in new drilling and production. The post-mortem on the energy crisis in Texas will, no doubt, force all power and gas utilities – regardless of where they are – to ensure they start next winter with adequate emergency natural gas supplies in storage. April is the start of the “summer” reinjection season which could support natural gas futures prices for the next seven months. With Texas, Mississippi, and Connecticut “re-opening,” the market will be watching for other states to follow suit which could result in more demand for energy.

Tom Curran, Senior Energy Services and Equipment Analyst in Equity Research, B. Riley Securities: As pressure pumpers resume work following the disruptions and delays inflicted by Winter Storm Uri, will the active U.S. frac spread count set a new recovery high? The Primary Vision weekly active count reached an upcycle-to-date peak of 175 on February 12 and then, as the storm’s effects spread from the Bakken into the MidCon and through South Texas, it plunged to 41 on February 19. As we’re submitting these responses, the most recent weekly reading available is for February 26, when the count stood at 140. As part of management’s opening remarks during Select Energy Services’ (NYSE: WTTR) 4Q20 earnings call, CFO Nick Swyka said, “We expect active frac crews to advance toward the 180 to 200 crew count range in the back half of the year.”

Barani Krishnan, Senior Commodity Analyst, Investing.com: Some normality in U.S. Energy Information Administration numbers, please.

To contact the author, email mveazey@rigzone.com.



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