THE WEEKLY NATURAL GAS MARKET NEWSLETTER

FEBRUARY 28, 2022

NATURAL GAS NEWS & NOTES

For the week ending 2/25, the new prompt month April 2022 NYMEX natural gas futures contract settled 4 cents higher at $4.47. March 2022 futures expired at $4.568 on Thursday. The March contract experienced extremely volatile trading when it took over as the prompt month contract on 1/27. The contract saw a high of $5.537 and a low of $3.886. The now prompt April contract will likely resume extremely volatile trading conditions over the course of the next few weeks.

The weekly EIA storage report showed a withdrawal of 129 BCF. This was a bit larger than most analyst expectations of a withdrawal closer to 126 BCF. Storage inventories are now 10.5% below last year's level and 10.7 BCF below the previous 5-year average. The early estimate for next week's storage report for the week ending 2/25 is a withdrawal of 125 BCF.

Global energy markets were rattled on Thursday with Russia's invasion of Ukraine. WTI crude oil prices spiked to over $100/BBL and the newly prompt April natural gas contract soared to $4.94. By the close of trading on Friday, energy commodity markets had calmed down and returned to "pre-invasion" levels. Domestically, the situation in the Ukraine shouldn't impact US markets directly. While the US is dependent on Russia oil exports to some degree, those volumes can be replaced within the global market. Eastern Europe has a far bigger worry in that Russia supplies over 30% of the natural gas volumes to the region. The new Nord Stream 2 gas pipeline that was set to start flowing gas from Russia to Germany this year has been part of the sanctions rolled out by many nations. Should Russia decide to use their energy supplies as a "political" weapon by withholding supplies to European countries, that could spell trouble for many nations already ravaged by extremely high energy prices. From a US standpoint, this only reinforces the notion that exports of LNG to Europe will remain very strong in 2022.