The Weekly Natural Gas Market Newsletter April 11, 2022
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.