The Weekly Natural Gas Market Newsletter July 18, 2022
The Weekly Natural Gas Market Newsletter
July 18, 2022
Natural Gas News & Notes
For the week ending 7/15, the August NYMEX natural
gas futures contract closed 98.2 cents higher at $7.016.
This is the highest weekly settlement price for the
prompt month contract since 6/17. The natural gas
market started to fall steeply on 6/8 as a result of the
temporarily closure of the Freeport LNG facility. The
August contract has traded as low as $5.32 since taking
over as the prompt month contract at the end of June.
The contract has found some strength recently due to
extremely hot weather in parts of the country that is
driving electricity demand to record setting levels.
The weekly EIA storage report showed an injection of 58
BCF. This was a little bit higher than the market
expectation of a 55 BCF injection. Storage inventories
are now at 2,369 BCF which is 9.6% below year ago
levels and 11.9% below the previous 5-year average.
The early expectation for next Thursday's report is an
injection of 43 BCF.
Extreme heat is blanketing many regions of the country
that rely heavily on natural gas to fuel power plants.
Natural gas is used to power more than 50% of all
power generation in Texas. The Texas/ERCOT power
grid set a record high for demand this week at over
80,000 MW. ERCOT has issued notices of potential
blackouts and has asked for end-users to conserve
electricity. Natural gas will continue to play a key role in
trying to keep the lights on in Texas as the peak summer
heating season looms. The Freeport LNG plant closure
has been a blessing to the natural gas market as an
additional 2 BCF/day of natural gas supply has been
returned for domestic use. Most of this natural gas is
being used to fuel power plants in Texas and other parts
of the Southwest. The delicate balance between
natural gas supply and natural gas demand has been on
full display over the last few weeks. Extreme price
volatility is expected to continue to be seen for the
trading weeks ahead.