Energy Market Update: June 2023 Recap

The Shipley Energy Commercial Solutions Team is excited to share with you the June Energy Market Update to keep you informed on trends, weather, and other factors impacting the energy market. Read last month’s energy market update here.

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Natural Gas Update
Electricity Update
Petroleum Update


Natural Gas Market Update

The July 2023 NYMEX Natural Gas contract expired at a price of $2.603/mmbtu. This is the lowest settlement price for a July NYMEX contract since 2020 ($1.495) and is down 60% from last year’s July settlement price ($6.551). Nymex natural gas prices have reached near 2020 level price lows recently due to warm weather and low heating demand.

Hot summer temperatures across most of the country in June and July have prompted steady drops in the level of natural gas demand for heating. This low demand is what has allowed Nymex market pricing to reach 2020 level price lows in recent months. Things may change however as temperatures continue to climb during the peak of summer with households and businesses across the U.S. cranking up the air conditioners.

As of 2022, 40% of the electricity generated within the United States was produced at facilities fueled by natural gas. This increased summer demand for natural gas to fuel power generation could spark a rise in Nymex pricing.

Contributing to the current downward pressure on the Nymex market is the current level of gas available in underground storage for use in winter. The level of gas available in underground storage is currently 25% higher than last year at this time and 15% higher than the 5-year average for this time of year. With ample gas in storage, there is lower concern for supply shortages during peak winter months.

Factors impacting the natural gas markets currently:

  • Hot early summer temperatures across most of the U.S. driving down heating demand.
  • Levels of gas available in underground winter storage 15% higher than the 5-year average for this time of year.

Action Advice:

With continued low demand and strong levels of gas in winter storage, the NYMEX natural gas market has hovered consistently around the $2.50-$3 range in recent months. Act now to lock-in low fixed natural gas supply rates for the next 6-12 months before peak summer heat drives up demand for natural gas to fuel power generation.

Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. Ask your Account Manager for details.


July 2023 Natural Gas NYMEX Settlement Price: $2.603/mmbtu
Last month: June 2023 Natural Gas NYMEX Settlement Price: $2.181/mmbtu
Last year: July 2022 Natural Gas NYMEX Settlement Price: $6.551/mmbtu



Electricity Market Update

June rewarded the patient. The 12-month forward PPL curve is trading at 4.38 cents per kWh, down from last month’s 4.55, despite the prompt natural gas price leaping from the $2.20 range to being consistently above $2.50. This paints a picture of short-term increases more than offset by 2024 opportunities. January 2024 broke 7 cents for the first time since becoming relevant and is now trading at 6.86 cents per kWh. Since January tends to lead the year in pricing and ruin the party for anyone enticed by spring prices in the low 3’s, it is an important indicator of whether there’s a true fixed-price opportunity. (Friendly, frequent reminder: this 4.38 cents is energy only. While it makes up most of an all-in fixed price, several components must be added to arrive at all-in fixed.)

How good is a January under 7 cents? Let us look at some comparisons:

  • A year ago, the upcoming January (2023) was trading at 14.3 cents – more than double our upcoming rate.
  • January 2023 hit 18.8 cents on August 26th of last year, nearly triple the going January rate.
  • A year ago, January 2024 at was trading at 10.3 cents. That’s nearly 3.5 cents of realized savings for the unhedged.
  • As recently as late May, January’s floor was 8 cents. We busted through that and kept going, even as the planet hit record high temperatures and near-term natural gas held steady.

At this point customers looking to lock in all of 2024/25 at once seem to fall into two camps. The first camp is those lucky enough to just now be rolling off their early-Covid prices; they seem relieved, like they waited out the 2022 storm and can take these mitigated increases after all the scary news they have heard. The second camp is those whose early-Covid contracts expired last year and who had to take their higher-priced licks to fix 2023. These customers are more reticent to lock in, seemingly because they feel they already paid their premium and are now “due” their pre-Covid rate (also known as their lowest price ever) once again. And while patience has been rewarded thus far, there are no market indicators to point to a return to $1.50 natural gas prices and a 12-month curve of 2.65 cents.

The war rages on, Europe still faces massive energy uncertainty, we are adding about 2 billion cubic feet per day of LNG each year which cannibalizes domestic supply, the average two-meter surface temperature of the Earth reached an all-time high three days in a row in early July, and the recession hasn’t shown up in the way all the experts had promised. If you are longing for the days of March 13th, 2020, you may want to ask yourself how realistic that really is.

Action Items: 

  • Anyone unhedged through any part of 2023: Lock it down. A no-brainer, and utility prices to compare are high across the country.
  • Small to midsize users (under 2 million kWh annually) renewing in early 2024: Lock in 12-24 months and our team can strategize to secure the best pricing possible with current market conditions.
  • Larger users renewing in early 2024: Technically the experts are calling for a portfolio approach – lock in some and let some float. If you have an appetite for this type of managed product, it’s a great strategy. There are about 20 tick-marks in the pro’s column to locking in now.

Bottom line:

In a 90-second conversation, we can get a sense of your risk tolerance and appetite to play the energy market and help you decide how to capitalize on this moment. Reach out to your Shipley Energy advisor today.



Petroleum Market Update

It’s All About Demand.

It is peak driving season. U.S. gasoline demand, measured during the final week of June, rises to the highest level since October 2021.  Demand coming into July 4th is typically a high watermark for gasoline. For perspective, comparing to the same week in 2022, gasoline demand increased ~59M gallons (1.4M barrels). Travelers are steadily increasing their mobility, potentially slightly offset by a less robust economy and higher interest rate environment hitting consumers. To note, overall gasoline futures prices for month ending June 30 expired at $2.6340/gallon, compared to June 2022 record all-time-high set on 6/6/22 at $4.3260/gal.

Distillate demand has seen a slight increase, rounding out June with the first overall inventory draw in 5 weeks. Demand popped to 500k barrels per day but sagged 5% overall compared with this data to the year prior. Overall domestic distillate stocks are -20M barrels below the 5-year average. Without a sizeable increase in inventory stocks, we can expect periods of volatility, most of which we expect to show up in the front spread.

Crude oil demand is a different story. The main key drivers are:

  • China demand has yet to manifest in ways large institutions expected, causing price expectations for WTI and Brent to be slashed by ~10% into year end.
  • Russian production has steadily continued while OPEC+ has attempted to slow global demand with significant production cuts and waning U.S. crude production.
  • Broadly, there are underpinnings of supply tightening in the back half of 2023 into 2024, as the global economy catches up and pushes through the recent headwinds of the higher cost of capital with current global interest rates.
  • So far U.S. economic activity remains robust as the Federal Reserve signals a wait-and-see approach, but they are not done raising interest rates just yet.

Propane price curve is flat through next year as domestic stocks remain ample coming out of warm winter, while plastic and chemical production remain lower in the current global economic environment.


Action Advice:

Forward distillate prices remain clearly in our focus. Key support price areas we are focused on 2.40, 2.22, 2.15, 2.00. In the interim we feel the distillate market has put in a seasonal bottom as the focus begins to shift to the cooler months. The winter strip [calendar Oct23-Apr24] is now 11 cents backwardated (2.53 Oct vs 2.42 Apr). In May the curve was flat, where we described potential opportunities to start locking in strips, as it was in our view overly pricing in a steeper recession reflected lower demand. At the time of writing the market has since moved away from this thesis pointing to the potential 1-2 punch of increasing demand into the cooler months.

Please continue to speak with your Shipley Energy Fuels Advisor to help your business navigate the current market.


June Energy Market Opens and Closes


Disclaimer: The market update is intended solely for informational purposes only. Shipley Energy Company does not warrant or attest to its accuracy. All actions and judgments taken in response to this report are the recipient’s sole responsibility. Shipley Energy Company shall not be liable for any direct, indirect, incidental, consequential, special, or exemplary damages or lost profit resulting from these market updates.

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