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The Weekly Natural Gas Market Newsletter February 10, 2023 

The Weekly Natural Gas Market Newsletter

February 10, 2023

Natural Gas News & Notes

The March 2023 NYMEX natural gas futures contract closed 10.4 cents higher on the week at $2.514. This is the first time in 8 weeks that the front month futures contract has closed higher during a trading week. The March contract traded in a relatively tight trading range posting a high of $2.66 and a low of $2.35.

For the week ending 2/3, the EIA reported a withdrawal of 217 BCF. This was a slightly larger figure than the 202 BCF estimate that market analysts had expected. Storage inventories bow stand at 2,366 BCF which is 10.9% above year‐ago levels and 5.2% above the previous 5‐year average. Estimates for next week's report indicate a withdrawal in the 100 BCF range.

The March contract tried to break through the $2.35 level on a few occasions during the week but was unable to do so. This level might offer some decent near‐term support. The market appears to be consolidating after being in free‐fall mode for the last 2 months. With the contract being technically oversold, a correction of some sort is likely needed before the near‐term direction of the contract is determined. Weather will continue to play a key factor in determining that price direction. After experiencing colder than normal weather for November and December, January produced the warmest January month since 2006 yielding 168 HDD below normal. Thus far, February has also been warm and is expected to yield a more modest 64 HDD below normal. While warmer weather has predictably had an impact on pressuring near‐term prices lower, the market is also starting to see the possibility of price destruction negatively impacting production growth. This will be closely monitored in the months to come.