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The Weekly Natural Gas Market Newsletter September 7, 2021

October 2021 NYMEX natural gas futures settled 32.4 cents higher at $4.712 to close out yet another week of volatile trading and another week of price gains. The October contract has now rallied almost a dollar since touching a low of $3.75 back on 8/19.

Following the impact of Hurricane Ida which made landfall last weekend on the Louisiana coast, traders have been looking for signs that the storm might have caused long-term impacts to critical natural gas infrastructure. Prior to Ida's arrival, 95% of the natural gas production in the Gulf was shut-in as a precaution. While damage appears to be mild to the off-shore platforms that produce natural gas, critical on-shore services infrastructure was damaged which has traders wondering when natural gas production from the region will be back at full strength and how an already "tight" market will be impacted.

For the week ending 8/27, the EIA reported an injection of only 20 BCF. This injection was another miss against analyst's expectations of 27 BCF, the second weekly miss in a row. Storage levels now stand 16.8% below last year's level and 7.2% below the previous 5-year average. Analysts are starting to wonder if the expected starting level of natural gas storage for the heating season will be even lower than expected.

From a Technical trading standpoint, the October contract is closing the gap on a continuous chart dating back to late 2018 when the then prompt December 2018 contract made a run at the $5.00 level. The $4.80- $5.00 will be very important resistance levels to watch over the next few trading sessions. Patience is a must for end-users needing to hedge both open October exposure as well as the upcoming Nov-Mar heating season. Buying market dips would be recommended at this time