The Weekly Natural Gas Market Newsletter

July 11, 2022

Natural Gas News & Notes

For the week ending 7/8, the August NYMEX natural gas futures contract closed 61 cents higher at $6.034 as the natural gas market continued its volatile trading pattern. The contract spent most of the week in the red, trading to a low of $5.325 on Wednesday. A bullish natural gas storage report on Thursday pushed the contract to a weekly high of $6.381 before losing some ground heading into the weekend.

The weekly storage report showed an injection of 60 BCF for the week ending 7/1. The market had been expecting an injection of around 75 BCF. The tighter report caught many traders off guard and caused the market to rally almost $.80 on the day. Storage inventories now stand at 2,311 BCF which is 10.1% below year-ago levels and 12.2% below the previous 5- year average.

The last 4 weeks of trading has seen the natural gas market drop from the front month contract trading above $9.00 to almost the $5.00 market. Extreme price volatility would be considered an understatement for how this market has reacted since the unexpected Freeport LNG outage began on 6/8. The natural gas market sits in a very oversold technical situation, so a corrective price bounce is to be expected. The loss of Freeport's daily exports means that 2 BCF of natural gas supply is back into the domestic market. The weekly storage report that showed a very "bad miss" might indicate that the natural gas market is even tighter than we thought. Demand for natural gas from the power generation sector is up 3.2% from this time last year at 40.6 BCF/day. As summer starts to hit its peak, demand for power generation could see record setting levels. This would be very bullish for natural gas prices in the coming weeks which makes the market drop a great opportunity for end users to lock in long-term pricing to mitigate future market price risk.