The Weekly Natural Gas Market Newsletter

September 12, 2022

Natural Gas News & Notes

The October NYMEX natural gas futures contract closed its first full week of trading as the prompt month contract settling down $1.266. While it was expected that the contract might show some weakness after trading from last week, the magnitude of the weekly drop was a little unexpected. After opening at $9.028 on Monday, the contract fell to an intra-day low of $7.751 by Tuesday before rebounding slightly by week's end. The contract easily broke the first technical support level of $8.30 but couldn't quote reach the next major support level of $7.50. On the week, the contract spanned a trading range $1.375 demonstrating yet again the volatility that exists in the current natural gas market.

On Thursday, the EIA released the weekly storage report that showed an injection of 54 BCF. This was mostly right in-line with analysts' expectations. Storage inventories are now 7.6% below year ago levels and 11.5% below the five-year average. Expectations for next week's report indicate an injection of 77 BCF.

Daily natural gas production on the week averaged over 100 BCF/day. With increasing daily supply and improving weather conditions that might reduce power generation demand for natural gas, it's possible that existing near-term downside pressure on prices will continue. If the October contract can test and break support at $7.50, gaps in the charts indicate that a future test of $7.00 and then $6.50 could be in the works. However, a period of price consolidation is likely needed before a major next leg down in pricing can be achieved. Also, with the heart of tropical storm season approaching, increased volatility in pricing should be expected.