The Weekly Natural Gas Market Newsletter April 3rd, 2023
The April NYMEX natural gas futures contract expired on
Wednesday at $1.991. The May contract has now taken
over as the prompt month contract and settled 14.5
cents lower on the week at $2.216. The contract
opened the week at $2.288 and traded to a high of
$2.299 before ultimately falling to a low of $2.074 in
early morning trading on Friday. Some fresh buying
occurred later in the day that ultimately pushed the
contract higher to its weekly closing price.
For the week ending 3/24, the EIA reported a withdrawal of 47 BCF. The withdrawal was right in‐line with market estimates and storage inventories now stand at 1,853 BCF which is 31.3% above year ago levels and 21.0% above the previous 5‐year average. Early estimates for next week's report indicate a withdrawal around 30 BCF is expected. Next week's report for the week ending 3/31 will be the last report of the traditional heating season. Some cooler temperature outlooks indicate that the market might see an additional small withdrawal or two over the next few weeks, but storage is on pace to enter the injection season in a very comfortable position as compared to this time last year.
Daily feedgas levels for US LNG exports hit a record high level this week of 14.3 BCF. Feedgas to the Freeport LNG facility surpassed 2 BCF/day for the first time since early June 2022 before the fire that knocked the plant offline for almost 8 months occurred. The extra 2 BCF of gas supply that the market absorbed due to the outage has played a key role in the price collapse of natural gas prices over the last few months. Consistent usage by the Freeport facility will play another key role in the gradual tightening of the market that is expected to occur later in 2023 and 2024. While the perceived tightening is being reflected in these outer months and years, near‐term bearishness will likely continue to pressure front month prices down and a move below $2.00 for the May contract looks possible.