This Is the Last Burner Tip post
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Executive Summary:
Infrastructure: East Daley has lowered our natural gas price forecast due to the ripple effects of the Iran conflict.
Rigs: The US rig count decreased by 1 for the week of April 5, bringing the total count to 518.
Storage: Traders and analysts expect the EIA to report a 56 Bcf injection for the week ending April 10.
Infrastructure:
East Daley Analytics has lowered our natural gas price forecast due to the ripple effects of the Iran conflict. Last week we outlined how the war has reshaped the US gas supply picture: Elevated crude prices mean more drilling in liquids-focused basins, and more associated gas growth. We have now locked those assumptions into our formal forecast.
The largest price revisions in the Macro Supply & Demand report begin in early 2027 and run through late 2028, when accelerating associated gas production pushes our forecast roughly $0.60/MMBtu lower than the prior outlook. Henry Hub prices do not rise above $4.50 until winter 2028–29 (see figure below).
There is upside risk to the summer 2028 and winter 2028–29 strips if the war ends early. By 2030, storage deficits return vs the 5-year average as domestic and LNG demand finally catch up to production.
The associated gas surge displaces growth from higher-cost basins. East Daley reduces Anadarko production by about 750 MMcf/d and the Rockies by 250 MMcf/d in our 2030 outlook. The Permian adds nearly 1 Bcf/d of new supply by then, while growth from the Eagle Ford, ArkLaTex and Northeast balance the market at the margin.
The crude oil outlook is the other side to the story. In the Crude Hub Model, East Daley projects Permian crude oil production to grow 2.9% (+196 Mb/d) exit to exit in 2026, with cumulative growth of over 350 Mb/d through December 2030. Bakken growth accelerates as well, increasing 4.1% by YE26 (~51 Mb/d) and 6.7% in 2027 (~86 Mb/d). The Bakken then holds at a similar growth pace through 2030. Continental Resources is a producer to watch, stating last week that it will increase its capital budget and production across its positions in the Bakken and Permian.
The old adage says the cure for high prices is high prices. In this case, high oil prices may be the cure for high gas prices.
Rigs:
The US rig count decreased during the week of April 5 from 519 to 518. The Uinta lost 1 rig W-o-W. In the Permian, the Delaware sub-basin lost 3 rigs while the Midland gained 3 rigs, resulting in no net change for the basin at large. Most basins saw rig activity hold steady W-o-W.
See East Daley Analytics’ weekly Rig Activity Tracker for more information on rigs by basin and company.
Storage:
Traders and analysts expect the Energy Information Administration (EIA) to report a 56 Bcf injection for the week ending April 10. A 56 Bcf injection would grow the surplus to the 5-year average for a third week in a row, from 87 Bcf after last week’s report to 105 Bcf. This would mark the first time the surplus has been above 100 Bcf since the week ending Jan. 22. The surplus to last year would increase by 34 Bcf to 123 Bcf.
The prompt-month futures price is extremely soft this week with little reason for a rally to push May above the $2.60/MMBtu range. While LNG export demand can prop up Henry Hub to a certain extent, we’ve reached a time of year where the lack of degree day accumulation is causing the market to loosen. Utilities, LDCs and marketers can inject gas into storage amid a relatively low-price environment and then withdraw from salt formations in the hotter summer months, or hold on to the gas in depleted reservoir storage for winter. Cash prices have also veered south this week but remain at a slight premium to the curve, meaning that some consolidation is due before the end of the month.
See East Daley’s latest Macro Supply & Demand Report for more on the market outlook.
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