US natural gas inventories increased by 61 Bcf for the week ending April 9, compared with the five-year (2016–2020) average net injection of 26 Bcf and the market consensus of 68 Bcf. Working gas stocks total 1,845 Bcf, which are 11 Bcf higher than the five-year average and 242 Bcf lower than last year at this time. Range bound trading will see prompt and near months hover between $2.50 and $2.80 per Dth unless above normal prolonged weather arises. End of season storage targets continues to point to end of injection season storage at 1,749 Bcf, which would be above the five-year average.
Another item of interest that we will be monitoring in the coming weeks is how gas suppliers deal with billing for the period during winter storm Uri. Many end users are facing massive cost increases for consuming during Operational Flow Orders (“OFO”) or Force Majeure notices. How these costs are calculated has become a source of ongoing concern. Because of this incident, relevant parties will undoubtedly change the terms and conditions of contracts.
End users with exposure to natural gas prices for the next few years need to practice diligent and prudent risk management. With exceptional value currently seen in the deferred years, end-users need to be FORWARD thinking to manage their long-term risk exposure to the natural gas market.
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