The Weekly Natural Gas Market Newsletter

February 6, 2023

Natural Gas News & Notes

The March 2023 NYMEX natural gas futures contract closed 43.9 cents lower on the week at $2.41. The contract gapped down on the open Monday morning and closed lower in 4 of the 5 trading sessions during the week. The contract traded in a 44‐cent range posting a high of $2.78 and a low of $2.34. The $2.34 print is the lowest price seen for a prompt month futures contract since April 2021.

For the week ending 1/27, the EIA reported a withdrawal of 151 BCF. This is a slightly larger withdrawal than the 141 BCF that most analysts had expected. Storage inventories are now at 2,583 BCF which is 9.4% above last year's level and 6.7% above the previous 5‐year average. The weekly report also included a revision to the previous week's report where 5 BCF was added back into the total storage figure. Early estimates for next week's report indicate a withdrawal in the 170 BCF range.

There hasn't been much bullish news to report on for NYMEX natural gas futures prices over the last 8 weeks. While there have been outbreaks of extreme cold temperatures events in different regions of the country, like parts of the Northeast are currently experiencing, these outbreaks have been short‐lived. While these extreme cold events have had a major impact on driving daily physical cash prices for natural gas to record high levels for a few days, they've failed to materialize into any sustained heating demand. There's now clearly an oversupply situation occurring in the market. The near‐term fundamentals have flipped from a market that once looked very tight to one that looks very loose. With supply currently outpacing demand, it's possible that natural gas futures could see additional near‐term weakness with a test of the $2.00 level a real possibility in the coming weeks.