The Weekly Natural Gas Market Newsletter March 28, 2022
The Weekly Natural Gas Market Newsletter
March 28, 2022
Natural Gas News & Notes
For the week ending 3/25, the April NYMEX natural gas
futures contract settled 70.8 cents higher at $5.571. A
combination of both technical buying and fundamental
support propelled prices to their highest levels seen for
a prompt month contract since early February. With
the April contract set to expire on Tuesday, daily price
volatility is expected to continue.
For the week ending 3/18, the EIA reported a
withdrawal of 51 BCF from storage. Storage inventories
now stand at 1.389 TCF which is 20.9% below year ago
levels and 17.4% below the previous 5-year average.
Milder temperatures for the week ending 3/25
decreased the amount of heating degree days (HDDs)
nationally and early expectations are for an injection of
25 BCF to be seen on next week's report. However,
cooler forecasts for the end of March and beginning of
April might lead to an additional weekly withdrawal
before the injection season officially starts.
Natural gas demand continues to outpace natural gas
supply growth. Daily natural gas production is currently
seen at about 95 BCF/day. LNG demand is running at
full bore and is expected to continue to do so for the
foreseeable future. 70% of all LNG shipments from the
US are now heading to Europe to help eastern European
countries replace gas supplies normally provided by
Russia. The US power generation sector will start
ramping up demand as the cooling season is set to
begin soon. With Russia being the largest exporter of
coal to eastern Europe, global coal prices are soaring as
the war in Ukraine rages. Coal is no longer looking like
the "marginal" or most economic fuel source in the US
for power generators who have the ability to switch
between natural gas and coal. This puts more pressure
on natural gas to play a bigger role in meeting cooling
demand needs this summer. This directly impacts the
ability to potentially refill storage to adequate levels for
heating season 2022/2023 where prices are already
nearing $6.00 for some winter months. Mitigating near
and long-term price risk is advised for all end users.
