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  • ⚡ From Crude to Nat Gas, Inventories are Declining

⚡ From Crude to Nat Gas, Inventories are Declining

Plus, a taste of valuation sanity

Author

Doug Stetzer
January 23, 2025

January 22, 2025

Morning…

If you're having trouble keeping up with the pace of news this week, you aren't alone.

This is what technical analysis is made for. Just watch the price action.

~​Doug

What’s in today’s issue:

  • Energy Market Recap

  • Nat Gas Goes Boom

  • Headlines

Crude Oil (Mar)$75.44-0.39-0.51%
Natural Gas (Feb)$3.960+0.204+5.43%
Copper (March)$4.3010-0.0400-0.92%
S&P 5006,086.37+37.13+0.61%
Dollar Index (DXY)108.28+0.22+0.2%

ENERGY MARKETS

🛢️Oil prices continued their move lower, down by .5%, after failing to hold an overnight rally.

Current macro factors will go out the window if Trump slaps Canada with a tariff on Feb 1. We import more oil from Canada than anyone else, and at good prices due to a lack of export options for Alberta's oilfields.

Robert McNally, president of the Washington-based consulting firm Rapidan Energy Group, warns:

“Even before you consider Canadian retaliation, the U.S. consumer would take it on the chin [from tariffs],”

Trump wants inflation lower, energy prices lower, the dollar lower. Tariffs won't do it.

WTI Spreads

Feb/Mar: +.82
Mar/Dec: +6.61 (last +3.82)
Dec25/Dec26: +3.52

🔥Natural gas prices found support as the warming weather vs declining inventories tug of war persists. Despite the pullback, inventory draws seem to have the upper hand.

Prices were up 5.5% yesterday, briefly touching $4 before settling just below at 3.96.

The EIA reports inventory data later today. Expectations are for another large draw of around 250 bcf due to the cold weather, continuing the push below the 5 year average.

And not just in the US:

PRESENTED BY ENERGY 101

The courses companies use to onboard new hires and individuals use to rock interviews.

We cover how the industry works from Upstream to Downstream. Get access for yourself, your team, or your whole company today. Hit reply and ask how.

NAT GAS EXPLODES (IN A GOOD WAY)

Marty Stetzer, our company president and industry expert behind our courses often says, "it should be called the gas and oil industry."

Maybe that will catch on. After all, a boom in natural gas power generation is coming.

"As demand grows, natural gas has regained prominence as a reliable energy source, with utility companies planning 17.5 GW of new capacity in the coming years—the highest level of project activity since 2017."

And we've mentioned plenty of similar growth.

Number Crunching

None of this was enough to get LNG exporter Venture Global the valuation they wanted. They ​cut the number​ by $45 billion (40% of the original target). But, hey, in a memecoin market that is booming on all fronts can't blame them for going for it.

Michael Alfaro, chief investment officer of hedge fund Gallo Partners put it this way: “While the growth story for Venture Global is compelling and differentiated, investors pushed back on the near 20 times enterprise value to earnings multiple while its lower growth peer Cheniere trades at 12 times,”

HEADLINES

"Most of Fortescue’s iron ore is shipped to China to be turned into steel. Prices for iron ore have been under pressure from a crisis in China’s property market, as far fewer homes are built."

"Electricity consumption on the PJM Interconnection LLC grid, which stretches from Washington to Illinois, reached 145 gigawatts, topping the winter record set in 2015."

"The company expects to recover some of the $9 billion that was previously spent, the people familiar said. Completion of the reactors would then cost billions of dollars more over several years."

ECONOMIC CALENDAR

MONDAY
TUESDAY
WEDNESDAY
THURSDAY - Weekly Crude Oil Inventories, Weekly Natural Gas Inventories, Jobless Claims
FRIDAY