US Natural Gas_ Not to snow on this winter parade…but careful what you wish for. Sat Jan 11 2025

Summary of J.P. Morgan's U.S. Natural Gas Research Call Industry Overview - The report focuses on the U.S. natural gas market, highlighting significant weather impacts and market dynamics as of January 11, 2025 [1][4][5]. Key Points and Arguments 1. Weather Impact: January is projected to be 1.7 standard deviations colder than the 10-year norm, with an expected 1,024 heating degree days (HDDs), which is 137 HDDs colder than the 10-year average and 125 HDDs colder than last year [1][4]. 2. Storage Withdrawals: A nearly 1 Tcf withdrawal from storage is anticipated for January, reflecting the cold weather's impact on demand [4][12]. 3. Price Dynamics: The summer 2025 price has risen above $3.60/MMBtu, which could encourage increased production during the injection season and support gas-to-coal switching [4][7]. 4. Production Adjustments: Current production estimates have been revised down to 104.1 Bcf/day due to freeze-offs, with potential for a rebound in February [18][21]. 5. Gas-to-Coal Switching: Observations indicate a shift towards coal-fired power generation, with up to 1 Bcf/day of switching occurring due to higher natural gas prices [31][34]. 6. LNG Demand: Increased LNG feedgas demand is noted, particularly from the Plaquemines facility, which has ramped up flows significantly [23][25]. 7. Storage Trajectories: End-October storage estimates have been adjusted down to approximately 3.7 Tcf, with potential for recovery if production increases and gas-to-coal switching continues [30][36]. Additional Important Insights - Market Sentiment: There is a renewed excitement in the natural gas market not seen since 2014, driven by weather forecasts and market conditions [4]. - Cash Prices: The Henry Hub cash price has remained steady, but significant movements are expected as storage levels decline [13]. - Production Risks: The potential for freeze-offs could further impact production and storage levels, necessitating higher prices to balance the market [12][18]. - Future Projections: The report emphasizes the need for careful monitoring of weather patterns and their influence on market dynamics moving forward [12][21]. This summary encapsulates the critical insights from the J.P. Morgan research call regarding the U.S. natural gas market, focusing on weather impacts, price dynamics, production adjustments, and market sentiment.