The Weekly Natural Gas Market Newsletter

November 8, 2021

Natural Gas News & Notes

December 2021 NYMEX natural gas futures settled higher 9 cents on the week at $5.516. As has been the case for many weeks now, the natural gas market has experienced a lot of price volatility as the December contract traded in a 77-cent range this trading week. The contract posted an intra-week low of $5.11 in trading on Monday and an intra-week high of $5.88 in trading on Wednesday.

For the week ending 10/29, the EIA reported a storage injection of 63 BCF. This figure was right in-line with market estimates and storage inventories now stand at 3,611 BCF. Inventory levels are 8% below year-ago levels and 2.7% below the previous 5-year average. Early projections for the week ending 11/5 indicate what should be the final storage injection of the season with an estimated 25 BCF forecasted. Warmer temperatures in October have reduced Heating Degree Day (HDD) demand across the country. This combined with a drop in LNG daily exports, due to maintenance issues, as well as an uptick in daily natural gas production over the last few weeks has put storage at a better level to start the 2021/2022 heating season than had previously been expected. While storage looks adequate to meet demand for the upcoming heating season, concerns still exist about how storage levels will look heading into the 2022/2023 winter heating season.

Fundamentally, the natural gas market remains bullish. Despite seeing an uptick in daily natural gas production over the last few weeks, demand continues to outpace supply. Weather will play a key role in determining near-term price volatility and how storage levels will look heading into the spring injection season. Longer-term natural gas prices remain well supported and taking advantage of the market's current backwardation in price should be considered for end-users looking to mitigate future price risk.