The Weekly Natural Gas Market Newsletter

August 15, 2022

Natural Gas News & Notes

The September NYMEX natural gas futures contract settled 70.4 cents higher at $8.768 for the week ending 8/12. The contract gapped lower on the Monday open and hit a weekly low of $7.532 before buyers stepped back in. The contract gradually rose during the week but surged 65 cents on Thursday as the contract traded to a weekly high of $8.994 before giving back some of the gains ahead of the weekend. Concerns about natural gas storage levels and a drop in weekly natural gas production were the primary catalysts driving the price action during the week.

On Thursday, the EIA reported an injection of 44 BCF bringing storage inventories to 2,501 BCF. Storage levels are now 9.7% below last year's level and 11.9% below the 5-year average. The early estimate for next week's report is an injection of 28 BCF.

Natural gas production levels averaged a record high 98.6 BCF/day the week ending 8/5 but dropped to an average of 97.8 BCF/day for the week ending 8/12. Hot weather across the country has forecasters expecting that August will deliver 44 cooling degree days (CDD) above normal making it the hottest August on record in the last 20 years. Electricity demand for natural gas is at record high levels which is slowing the injection rate for natural gas storage. This tighter market now has analysts predicting that storage will be near 3.4 BCF heading into winter which is well below traditional "comfortable" levels of storage. The concerns about the storage deficit will likely keep natural gas prices elevated as the market heads into the shoulder season as fundamental conditions remain bullish for even higher prices yet to come.