The Weekly Natural Gas Market Newsletter

April 8, 2022

Natural Gas News & Notes

For the week ending 4/8, the May NYMEX natural gas futures contracted settled higher by 55.8 cents at $6.278. This is the highest prompt month contract price seen since 2008. Weekly trading continues to be volatile as the May contract traded in a 79.3 cent range. The contract opened the week trading at $5.745 and hit an intra-week high of $6.538 on Friday morning before finally losing a little steam heading into the daily settlement.

For the week ending 4/1, the EIA reported a withdrawal of 33 BCF. This was a slightly larger withdrawal than many analysts had expected. Some milder weather for the week ending 4/8 should result in a small injection on next week's storage report but very "unseasonably" cool weather through the middle of April could result in another small withdrawal from storage before the injection season begins in full. Storage inventories now stand at 1.382 TCF which is 22.4% below year-ago levels and 17.1% below the previous 5-year average. Concerns about refilling storage to adequate levels for the winter 2022/2023 heating season are very real and the market is reflecting this concern. A hot summer could prove to be disastrous for natural gas storage.

Gains in natural gas prices this week weren't just limited to the front month contracts. Cal23 NYMEX prices gained 49.5 cents on the week while Cal24 prices gained 30.7 cents. Both gains were the largest weekly recorded increases ever for these calendar strips so far. The underlying "tightness" in the fundamental landscape of the natural gas market is finally starting to be reflected across the entire forward price curve. Natural gas prices remain in a condition of steep backwardation. The spread between Bal Cal22 and Cal23 and Cal24 prices respectively is almost $1.50 and $2.40. For end-users customers with open exposure to the natural gas market in the coming years, these spreads make looking at long-term supply deals very attractive to mitigate future market price risk.