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The Weekly Natural Gas Market Newsletter September 20, 2021

October 2021 NYMEX natural gas futures settled $.167 higher on the week after yet another volatile week of trading. The contract traded in almost a 60-cent range during the week and posted a high of $5.65. The contract was unable to hold that high or most of the gains and closed on a down note for the week. The contract experienced almost a 45-cent loss in trading on Thursday and Friday alone.

For the week ending 9/10, the EIA reported an injection of 83 BCF into storage. This was larger than market estimates predicting an injection of 75 BCF. The impacts that recent tropical disturbances in the Gulf have had on slowing LNG feedgas demand for LNG exports helped increase the weekly build. Storage inventory levels now stand at 16.5% below year ago levels and 7.1% below the previous 5-year average. Based on the evaluation of weekly supply and demand values, it's likely that the storage report for the week ending 9/17 will also be higher than previously forecasted as the impacts of reduced LNG feedgas demand were still being felt during the week.

Unless something fundamentally changes in the next week and a half before the October contract expires, the short-term direction for pricing looks lower. The natural gas market has been technically overbought and has needed a corrective move. It's likely that this correction will continue as the October contract now looks poised to test support in the $4.60-$4.80 range. Buying the "dips" is recommend for end-users that not only have exposure to the October contract but also to the upcoming Nov-Mar heating season and calendar year 2022. The fundamentals of the natural gas market currently support higher long-term pricing which should also entice end-users to evaluate the steep pricing discount seen in calendar year 2023.