The Weekly Natural Gas Market Newsletter

October 4, 2021

Natural Gas News & Notes

October 2021 NYMEX natural gas expired at $5.841 after taking over the lead as the prompt month futures contract on 8/31 and beginning trade at $4.312. The contract posted a $6.28 high on its expiration date marking the first time that a prompt month contract has been over $6.00 since February 2014. The November 2021 contract is now the prompt contract, and all signs continue to point for more upside and price volatility in the weeks to come.

For the week ending 9/24, the EIA reported an injection into storage of 88 BCF. This was slightly larger than most analysts' expectation of an injection of 86 BCF. Storage inventories now stand at 3,170 BCF or 15.4% below year-ago levels and 6.3% below the previous 5- year average. With only a few weeks left in the traditional injection season, estimates for storage inventories entering the heating season still stand at between 3.5-3.6 TCF. While this level of gas in storage is adequate to meet storage needs this upcoming heating season, concerns about getting inventories to a healthy level for the heating season beginning in November 2022 will be a primary concern starting next spring.

Natural gas prices are in the middle of the largest "bull" run seen in over a decade. With global natural gas prices at their highest levels ever as a result of a severe supply crunch, it's only fitting that US natural gas prices are rallying too. Demand for US exports of gas via both LNG exports to Asia and Europe and exports via pipeline to Mexico account for almost 20% of domestic demand. With natural gas producers holding output steady as they continue to appease Wall Street and shareholders instead of trying to grab market share like in years past by flooding production into the market, natural gas pricing has both considerable room for more upside along with heightened levels of daily trading volatility.