The Weekly Natural Gas Market Newsletter

November 22, 2021

Natural Gas News & Notes

December 2021 NYMEX natural gas futures settled for the week at $5.065, up 27.4 cents. After peaking at a high of $6.29, after taking over as the prompt month contract in late October, the December contract has been in a downtrend reaching a near-term trading low of $4.71 this week on several occasions but has been unable to break through that level of support. The lack of sustained cold weather has been the primary driver for the contract's weakness over the last few weeks.

For the week ending 11/12, the EIA reported an injection of 26 BCF. This figure was right in-line with market estimates. Despite the calendar turning into November, when the traditional withdrawal season begins, mild temperatures have allowed storage levels to continue to modestly build. This week's injection supplements last week's gain of 7 BCF and storage now stands at 3,644 BCF. This is 7.8% below year ago levels and 2.2% below the previous 5-year average. Based on both weekly production and demand data, it's expected that for the week of 11/19, the EIA will report the first storage withdrawal of the season.

LNG daily feedgas demand recently hit a record high of 12 BCF. Global LNG prices have started to surge again with equivalent European gas prices trading at almost $29/DTH and Asian prices at almost $38/BCF. LNG feedgas demand should remain strong based on these prices and an increase in demand is expected as feedgas is now being sent to the startup of the Calcasieu Pass facility and for the addition of Train 6 at the Sabine Pass facility.

The pull back in natural gas prices over the last few weeks has allowed end-users a last opportunity to hedge open winter exposure. Prices for cal22 and cal23 remain attractive at existing levels and a long-term risk management strategy is recommended for these years.