Energy Market Outlook

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1 Kyle Cooper, (713) , Week Ending March 22, 2019 Please contact me to review a joint RBN Energy daily publication detailing natural gas fundamentals. Price Action: The April contract fell 4.2 cents (1.5%) to $2.753 on a 17.6 cent range ($2.897/$2.721). Price Outlook: The market posted both a new high and low after bullish weather forecasts early in the week helped lift prices only to see moderating weather forecasts and a relatively small storage withdrawal and a bearish revision to the previous week s storage report pressured prices lower. Of the 1,003 weeks since 2000, 115 have witnessed both a new high and new weekly low while only 96 have witnessed inside weeks, where neither a new high nor low was paosted. For daily updated storage projections, subscribe to our joint publication with RBN Energy. CFTC data indicated a 545 contract increase in the managed money net long position as longs added and shorts added. This is the highest net long position since February 5. Total open interest rose 37,054 to million as of March 19. Aggregated CME futures open interest fell to million as of March 22. The current weather forecast is now cooler than 5 of the last 10 years. Pipeline data indicates total flows to Cheniere s Sabine Pass export facility were at 2.5 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting bcf. Cameron is exporting bcf. Weekly Storage: US working gas storage for the week ending March 15 indicated a withdrawal of (47) bcf. Working gas inventories fell to 1,143 bcf. Current inventories fall (303)bcf (-21.0%) below last year and fall (544) bcf (-32.3%) below the 5-year average. The EIA noted a revision for the withdrawal for the week ending March 8 that resulted in change from the originally reported (204) bcf to a withdrawal of (200) bcf. This was still a record weekly withdrawal. Storage Outlook: The EIA weekly implied flow was 0 bcf from our EIA storage estimate. This week s storage estimate was again outside our tolerance. The forecasts use a 10-year rolling temperature profile past the 15-day forecast. Our joint publication with RBN updates storage projections daily. Supply Trends: Total supply fell (1.2)bcf/d to 83.0 bcf/d. US production fell. Canadian imports fell. LNG imports fell. LNG exports fell. Mexican exports fell. The US Baker Hughes rig count fell (10). Oil activity decreased (9). Natural gas activity decreased (1). The total US rig count now stands at 1,016.The Canadian rig count fell (56) to 105. Thus, the total North American rig count fell (66) to 1,121 and now trails last year by (35). The higher efficiency US horizontal rig count fell (7) to 900 and rises +30 above last year. Demand Trends: Total demand fell (24.5) bcf/d to bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand fell. Electricity demand fell (10,661) gigawatt-hrs to 70,792 which trails last year by (1,856) (-2.6%) and trails the 5-year average by (780)(-1.1%%). Nuclear Generation: Nuclear generation fell (3,303)MW in the reference week to 83,879 MW. This is (3,412) MW lower than last year and (1,525) MW lower than the 5-year average. Recent output was at 83,432 MW. The heating season has begun. With a forecast through April 5 the 2018/19 total cooling index is at (2,875) compared to (2,711) for 2017/18, (2,241) for 2016/17, (2,419) for 2015/16, (2,814) for 2014/15, (3,111) for 2013/14, (2,896) for 2012/13 and (2,467) for 2011/12. Page 1 of 5

2 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Dec-18 Feb-19 Jan-16 Mar-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Dec-18 Feb-19 $/MMBtu CL/NG Ratio $13 $/MMBtu Ratio of NYMEX CL and NG NG $/MMBtu CL $/MMBtu $/MMBTU CL/NG Ratio 4.50 $ $ $ $ $ $ NYMEX Calendar Strips $3.30 NG Cal 2018 NG Cal 2019 NG Cal 2020 NG Cal 2021 $3.20 $3.10 $3.00 $2.90 $2.80 $2.70 $2.60 $2.50 Page 2 of 5

3 4-Jan 18-Jan 1-Feb 15-Feb 1-Mar 15-Mar 29-Mar 12-Apr 26-Apr 10-May 24-May 7-Jun 21-Jun 5-Jul 19-Jul 2-Aug 16-Aug 30-Aug 13-Sep 27-Sep 11-Oct 25-Oct 8-Nov 22-Nov 6-Dec 20-Dec 3-Jan BCF 4-Jan 18-Jan 1-Feb 15-Feb 1-Mar 15-Mar 29-Mar 12-Apr 26-Apr 10-May 24-May 7-Jun 21-Jun 5-Jul 19-Jul 2-Aug 16-Aug 30-Aug 13-Sep 27-Sep 11-Oct 25-Oct 8-Nov 22-Nov 6-Dec 20-Dec 3-Jan BCF 4,200 4,000 3, 3, 3,400 3,200 3,000 2, 2, 2,400 2,200 2,000 1, 1, 1,400 1,200 1,000 US Total Working Gas Storage - Source - EIA Yr Avg 5 Yr Avg Forecast Max Min 4,200 4,000 3, 3, 3,400 3,200 3,000 2, 2, 2,400 2,200 2,000 1, 1, 1,400 1,200 1,000 Canadian Working Gas Storage - Enerdata Yr Avg 5 Yr Max 5 Yr Min Page 3 of 5

4 bcf/d bcf/d US Total Suppy Current Yr Ago 5 Yr Avg 5 Yr Max 5 Yr Min US Total Demand Current Yr Ago 5 Yr Avg 5 Yr Max 5 Yr Min Page 4 of 5

5 ADDITIONAL INFORMATION AVAILABLE UPON REQUEST This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any commodity, futures contract, equity, bond or option contract on any other financial asset. IAF Advisors does not provide investment, financial, tax, or other advice, nor does it operate as a broker-dealer. IAF Advisors does not recommend the purchase or sale of any particular security or securities. Although any statements of fact in this report have been obtained from and are based upon sources that IAF Advisors believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. IAF Advisors, its officers and/or employees, may at any time have a long and/or short position in any commodity, futures contract, equity, bond or option contract on any other financial asset mentioned in this report. All opinions and estimates included in this report constitute IAF Advisors judgment as of the date of this report and are subject to change without notice. There is always a risk of loss in futures trading IAF Advisors Page 5 of 5