JPMorgan Econ FI-US Natural Gas Flash Note Max pain-106564017

JPMORGANNorthAmericaCommoditiesResearch16February2024USNaturalGasFlashNoteMaxpainFirstametaphor:ImaginewalkingthroughadarktunnelwithaglimmeroflightGlobalCommoditiesResearchupahead.Thepathbetweenyouandreachingthatlightismiredinquicksandwhichifnotnavigatedcorrectlyisapromisetosinkyouintoanabyssofnoreturn.ThisShikhaChaturvediACdarkpictureishowweviewtheplightofmostintheUSnaturalgasupstreamcommunitytoday.Butweremindourreaders,thereisalightattheendofthetunnel(1-212)834-3245-atleastforthosewhohaveexposuretoHenryHub.shikha.chaturvedi@jpmorgan.comJPMorganChaseBankNAUSnaturalgasfuturespricehasfallentolevelsnotseensinceJune30,1995onasettlementbasis(unadjustedforinflation),highlightingthatwithoutweather,even~30yearsofknowledgeandexperienceinthismarketisnotenoughtopreventtheUSupstreamcommunityfromthepotentialforeconomicproductioncurtailments.Amidtheacuteweatherforecastchangesmilder(Februaryweatherisnowforecast615HDDsvsthe10-yearnormalof778HDDs),ourcurrentend-Marchstoragetrajectoryhasrisento2.2Tcfwhileourend-Octoberstoragetrajectorynowpointsto4.25Tcf.Asareminder,embeddedinoursummer2024forecastisapullbackinproduction,drivenbyareductionintheNortheastof~1.5Bcf/dayrelativetoDecemberproduction,andweassumepowergenerationwilllikelyperformjustshyofsummer2023(300MMcf/daylowersummeroversummer).Withthedeclineinsummer2024price,wetendt...