Natural Gas Production Hits All-Time Highs, Energy Markets Treading Water

Energy markets are treading water Wednesday after modest gains overnight failed to hold. Tuesday saw a similar pattern with morning gains being wiped out pushing charts into neutral territory short term, while longer term charts continue to favor lower prices ahead.

Another Florida Hurricane coming? The NHC gives 90% odds of a storm developing in the Caribbean in the next few days, and models suggest it’s likely to head to Western Florida, not far from where Hurricane Milton made landfall in September. The good news is water temperatures have cooled in the 7 weeks since Milton became the 2nd most intense hurricane ever in the Gulf of Mexico, so odds of this becoming a major storm are much lower. That said, the European model still has projections of winds north of 100 miles per hour, so there are still plenty of risks.

Forecast models seem to agree on the path of this storm, unlike Rafael a week ago, and it appears that it will stay well to the South and East of the Gulf of Mexico oil platforms as it heads towards the Florida coast. The BSEE reported that Gulf of Mexico oil drilling and production operations were almost back to normal Tuesday after Rafael dissipated over open water.

Marathon reported two different flaring events at its Carson (LA-area) CA refinery in the past 24 hours, the first around 8:30 Tuesday morning and the second around 2:30am Wednesday. Details on a cause or impact of those events were not provided, but LA CARBOB basis differentials that had been under heavy selling pressure over the past week ticked higher Tuesday, and CARB diesel values also saw a modest increase during the day.

A problem most countries would love to have. The EIA this morning highlighted the growth in “associated” natural gas production in the US as oil production reaches all-time highs. That excess production has driven a boom in ethane and propane exports along the Gulf Coast, in addition to the more complex LNG facilities under construction to try and get that landlocked fuel to the global market.

Reminder that the weekly inventory stats are delayed a day due to Veterans Day on Monday, and the IEA’s monthly oil report is due out tomorrow morning as well.