The Weekly Natural Gas Market Newsletter

October 3, 2022

Natural Gas News & Notes

The November NYMEX natural gas futures contract settled 22.6 cents lower at $6.766. The November contract took over as the prompt month contract this week as the October NYMEX contract expired at $6.868. Continuing fundamental weakness in the natural gas market has pushed prices to their lowest level since early summer. The November contract finds itself in a technically oversold condition and a short-term bounce back higher is to be expected before the contract can probe new levels of price support in the low $6.00 and upper $5.00 range.

For the week ending 9/23, the EIA reported an injection of 103 BCF. Storage inventories now stand at 2,977 BCF which is 5.7% below last year's level and 9.3% below the previous 5-year average. This week's injection was slightly larger than analysts had expected. Early estimates for next week's report are for an injection of around 113 BCF. With 5 weeks left in the tradition injection season, starting winter inventory levels have steadily improved and it appears that storage could reach the 3.5-3.6 TCF level by November 1. While storage levels entering the heating season would still be deemed "below normal" inventory levels have improved steadily from earlier summer projections and have allowed the steep price premiums to dissipate.

Hurricane Ian was a non-factor as it relates to any production or infrastructure concerns in the Gulf. The storm was more of a "demand destructor" with power demand sapped from the state of Florida and other southeastern US states. With still a month left in Hurricane season, market participants will continue to monitor the weather to see if any other tropical systems look to develop. Unless a major fundamental event occurs, the natural gas market looks near-term bearish with lower prices to come.