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The Weekly Natural Gas Market Newsletter May 31, 2022

The Weekly Natural Gas Market Newsletter

May 31, 2022

Natural Gas News & Notes

For the week ending 5/27, the new prompt month July 2022 NYMEX futures contract rose 54.9 cents to settle at $8.727. On Thursday, the June NYMEX contract expired at $8.908. The June contract had an impressive run as the prompt month contract over the last few weeks. After opening trade at $7.395 on 4/28, the contract traded to a fresh 14-year high price of $9.401 this week before ultimately expiring just under $9.00. The July contract will likely continue to see the momentum for trading higher and it stands a good chance of reaching the $10+ level in the coming weeks.

For the week ending 5/20, the EIA reported an injection of 80 BCF into storage. This was a smaller injection than most market analysts had expected. Storage levels are now 1.812 TCF and are 17.6% below year-ago levels and 15.3% below the previous 5-year average. Based on existing supply vs demand fundamentals, it's expected that reaching an adequate level of natural gas in storage for the winter 2022/2023 season could be very difficult. The failure to reach an adequate level of storage before the heating season kicks in will likely boost winter natural gas pricing even higher. Storage levels will be a closely watched metric this summer.

LNG exports remain robust. Daily feedgas demand from LNG export facilities averaged 13 BCF last week. Peak daily demand was 13.3 BCF last week. This was the second highest level all-time with the record being 13.5 BCF set in late March. The newly commissioned Calcasieu Pass facility has been averaging over 1 BCF/day of feedgas demand since 5/9. Along with the also newly commissioned Sabine Pass Train 6, peak LNG feedgas demand this summer is likely to eclipse 14 BCF/day. LNG demand will continue to play a key role in supporting higher domestic natural gas prices this summer. End users that have yet to considering looking at purchasing long-term supply needs should do so while the market is still in a condition of deep backwardation.