The Weekly Natural Gas Market Newsletter

September 19, 2022

Natural Gas News & Notes

The October NYMEX natural gas futures contract closed 23.2 cents lower on the week at $7.764. The natural gas market experienced, yet again, another extremely volatile week of trading. Building on the previous week's bearish trade, the October contract fell to a low of $7.855 on Monday. By Wednesday, the contract surged to a high of $9.238 on fears of a rail strike in the US. After a last-minute effort by the US government to avert the strike, natural gas futures sank to their lowest level in more than a month on Friday touching a low of $7.717 before ultimately settling a little higher. The October contract experienced a $1.521 trading range on the week and the natural gas market has now marked its fourth straight week of losses.

On Thursday the EIA reported an injection of 77 BCF into storage. This was slightly higher than the averaged estimated build of 74 BCF. Storage inventories are now at 2,771 BCF which is 7.4% below year-ago levels and 11.3% below the previous 5-year average.

The averted rail strike was very bearish news for the natural gas market. As coal is a primary rail transported commodity, a strike would've likely impacted the amount of coal that power generators could receive. With coal inventories by utilities at a two-decade low level, a shortage of coal deliveries would prompt many dual fueled power generators to make the switch to natural gas out of necessity. This switch would've increased the usage of natural gas for power generation at a time when demand for natural gas by the power generation sector is expected to fall as weather transitions into the fall shoulder season. The outlook for natural gas looks near-term bearish with the October contract likely to test lower areas of price support.