The Weekly Natural Gas Market Newsletter

March 14, 2022

Natural Gas News & Notes

For the week ending 3/11, the April NYMEX natural gas futures contract settled 29.1 cents lower on the week at $4.725. The contract had rallied to a fresh 52-week high price of $5.184 early in the week in sympathy with global crude oil prices that surged to their highest levels since 2008 at over $120/BBL. April NYMEX futures couldn't sustain the rally and eventually posted an intraweek low of $4.45 before rebounding to close the trading week.

For the week ending March 4, the EIA reported a withdrawal of 124 BCF from storage. This was slightly higher than most analyst's expectations and leaves storage inventories at 1.519 TCF. Storage is now 15.6% below last year's level and 16% below the previous five-year average. The early estimate for this week's report for the weekend ending March 11 is a withdrawal of 55 BCF.

Thus far, the US natural gas market has been insulated from the Russia/Ukraine war. The only facet of the market impacted thus far has been LNG exports. The share of LNG cargo exports to Europe has jumped to 64% in March. This is up from 53% in February and sets a new US-EU LNG trade record. US LNG capacity has been down some as maintenance issues at both the Corpus Christie and Sabine Pass facilities has reduced daily feed gas demand.

In the medium and longer term, impacts to natural gas production, industrial gas demand and power burn could result in either a tightening or loosening impact on domestic natural gas fundamentals. These fundamentals will ultimately drive US natural gas price direction. Traders will be closely monitoring drilling activity, the impacts that prices have on gas sensitive industrial industries like chemical and plastics production and how power generators react to higher coal exports to Europe. Coal had appeared to be the "marginal" fuel source among generators that can utilize either natural gas or coal before the war began.