The Weekly Natural Gas Market Newsletter

November 7, 2022

Natural Gas News & Notes

The December NYMEX natural gas futures contract settled 71.6 cents higher this week at $6.40/DTH. For the week, the contract traded in a 90-cent range posting a high of $6.51 and a low of $5.61. The contract got off to a bearish start this week when reports surfaced that the Freeport LNG facility might be facing a delay in restarting. The facility was required by the Pipeline and Hazardous Materials Safety Administration (PHMSA) to submit both a "root cause" of the fire that forced the plant's closure as well as a restart plan. While the report outlining the cause of the fire has been submitted, the restart plan, as of this week, has not been submitted. These delay concerns pushed the contract to its intra-week low, but buyers quickly stepped in and viewed the drop as a good buying opportunity.

For the week ending 10/28, the EIA reported an injection of 107 BCF. This was a larger injection than most market analysts had been expecting. Storage inventories now stand at 3,501 BCF which is 2.8% below year-ago levels and 3.7% below the previous 5-year average. While the traditional injection season is ending, mild weather is going to allow for a few more injection weeks to be seen. Expectations for next week's report are for an injection of 77 BCF.

Natural gas storage levels have had a remarkable change of direction since early summer. The outage of the Freeport LNG facility and increased daily production have been the primary drivers that have allowed storage to refill at such an aggressive rate. When Freeport eventually comes back on-line, a tighter supply vs demand balance is expected to be seen. Combined with weather related heating demand, natural gas prices look poised for more near-term upside price risk than downside gain.