The Weekly Natural Gas Market Newsletter July 11, 2022
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.