2023 Permian Outlook Revised Lower in Latest Forecast

Natural Gas Weekly: January 13, 2023

Rigs – East Daley lowered our 2023 Permian Basin gas supply forecast by 0.3 Bcf/d in our latest monthly update. We now expect Permian natural gas production to grow by 2.68 Bcf/d on average in 2023 vs growth of 2.98 Bcf/d in our previous forecast, a decline of 11%. The revision is mainly due to lower rig expectations in the Permian as oil and gas prices have declined. Rig counts in 2023 are 4% lower in the Permian compared to our November forecast.

Flows – Northeast pipeline samples have recovered from the holiday freeze-offs and are beginning to trend in line with East Daley’s forecast. Appalachian wells froze over in late December when temperatures dipped into the single digits, leading to large storage draws as heating demand surged. We’ve been calling for a Northeast production ramp when colder seasonal weather arrived. However, forecasts predict above-normal temperatures through the end of January in the region, which could put pressure on prices and demand.

Storage  -  EIA reported a counter-seasonal 11 Bcf storage injection for the Jan. 6 week, putting inventories at 2,902 Bcf. We had forecast storage to end December at 2,833 Bcf. Storage is 40 Bcf below the 5-year average after the latest EIA report.

Natural Gas Weekly

East Daley Analytics' Natural Gas Weekly provides a weekly update to our monthly Macro Supply and Demand Forecast. The update covers rigs, flows, production, prices and capacity constraints that materially change our view on supply and demand. This update highlights what investors and traders need to monitor in natural gas to ensure they are on the right side of the market. Subscribe to the Natural Gas Weekly.