The Weekly Natural Gas Market Newsletter

January 9, 2023

Natural Gas News & Notes

The February 2023 NYMEX natural gas futures contract settled 84.9 cents lower at $3.710 for the week. The contract was in defensive mode all week after opening trade at $4.393. The contract posted trading losses in 4 of the 5 trading sessions eventually hitting an intra‐week low of $3.52 on Friday. The February contract is now trading at its lowest levels seen for a prompt month futures contract since the end of 2021.

For the week ending December 30, the EIA reported a withdrawal of 221 BCF. This is the largest weekly withdrawal reported thus far this heating season, but the number was a bit lower than the 240 BCF that most market analysts had expected to see. Storage inventories now stand at 2,891 BCF which is 9.5% below year‐ago levels and 6.7% below the previous 5‐year average. As most of the extreme cold weather moved out of the country by the start of last week, the expectation for next week's report is only a meager withdrawal of 12 BCF.

NYMEX natural gas futures prices have been in a freefall since early December. Despite some short‐ term cold weather that briefly sent physical daily natural gas prices skyrocketing across the country, near‐term contract months have been pressured lower by an unexpected short‐term glut in supply. Overall mild weather combined with the continued outage of the Freeport LNG facility has created a loose fundamental situation. For the first time in over a year, front month NYMEX prices are trading in contango to the rest of the natural gas forward curve. Prices for outer years in 2024 and 2025 are trading at premiums to the near‐term months indicating that the unexpected looseness of the near‐term natural gas market will once again re‐ tighten over time.