The Weekly Natural Gas Market Newsletter January 30, 2023

January 30, 2023

Natural Gas News & Notes

The February 2023 NYMEX natural gas futures contract expired this week at $3.109. The contract gapped up almost 30 cents on Monday morning from last Friday's close. The contract traded to a high of $3.60 by Tuesday as part of a technically led short covering rally. But the near‐term bearishness of the natural gas market fundamentals took over and ultimately pushed the February contract below the $3.00 level by Thursday and to a low of $2.761. The contract rebounded some on Friday to expire back above the $3.00 level amidst low volume trading. The March 2023 contract now takes over as the prompt month contract.

For the week ending 1/20 the EIA reported a withdrawal of 91 BCF. This was slightly larger than the expected withdrawal of 83 BCF. Storage inventories now stand at 2,729 BCF which is 4.1% above last year's level and 4.9% above the previous 5‐year average. The early estimate for next week's report is a withdrawal around 130 BCF.

Natural gas prices have plunged almost 50% since mid‐December as sustained cold weather has yet to really materialize. January is forecasted to be 176 gas weighted heating degree days warmer than normal, which would make it the warmest January since 2006. While the lack of cold weather has been the largest factor contributing to the plunge in prices, the continued outage of the Freeport LNG export facility has also been a major factor. This week, the Freeport facility finally received the much‐ anticipated regulatory approvals from FERC to restart some operations. It's expected that the facility will return to full operations in the coming weeks. While Freeport's return would be bullish for natural gas demand, prices still might have room to fall further in the coming weeks.