The Weekly Natural Gas Market Newsletter March 13th, 2023
The April NYMEX natural gas futures contract settled 57.9 cents lower at $2.430 reversing the brief uptrend that the contract started last week. The contract gapped down almost 20 cents from last Friday's settlement to open trading on Monday at $2.83. The contract was initially pressured lower as weather outlooks from last weekend for this trading week changed dramatically from previous expectations. The forecast lost 32 heating degree days which sparked the decline. Additional daily reductions in LNG feedgas demand at the Sabine Pass LNG facility further contributed to the decline. LNG feedgas demand had recently set a record high of 13.7 BCF last Friday but dropped to 12.2 BCF for several days this week.
For the week ending 3/3, the EIA reported a withdrawal of 84 BCF. Storage inventories now stand at 2,030 BCF which is 32.1% above year ago levels and 21.5% above the previous 5‐year average. Early estimates for next week indicate a withdrawal of 50 BCF. Based on weather outlooks for the next few weeks it's possible that storage will end the traditional withdrawal season above 1,800 BCF.
The sentiment for near‐term natural gas prices is extremely bearish. With winter all but failing to materialize this year in the form of any sustained heating demand and with strong daily production levels being recorded, storage concerns that once worried the market last fall have essentially become a non‐issue. The market has shifted focus now to see how rig count and production values will react to the near‐term weakness in pricing. The rig count has already started to drop with the last reported count at 153 rigs down from a recent peak of 160 rigs back on 1/27. Daily production levels are seen hovering around 100 BCF/day down from a peak of 102.2 BCF/day in mid‐ January.