Winter NYMEX contracts from November 2021 to March 2022 settled down for a second straight week, and along with them came the calendar average prices for years 2022 and 2023. While this is good news for end-users looking for an opportunity to hedge near-term exposure, the reality is this price pullback is likely to be short lived.
With many LNG cargo contracts from the U.S. now having prices linked to Henry Hub settlements and elevated global spot prices being fundamentally supported by supply and storage shortages, near-term NYMEX prices will likely march higher when the first wave of winter weather moves into Europe and Asia. Clients hoping to place defensive price hedges for the first quarter of 2022 should look to make those purchases as soon as possible.
The November 2021 NYMEX contract will settle on Wednesday, October 27th. Since becoming the front traded contract on September 29th, prices have ranged from a low of $4.825 on 10/18 and a high of $6.466 on 10/6. Should current prices hold to expiration this would be the first November contract to settle above $4 since 2009.
EIA Storage Report
For the week ending 15 October, US EIA reported an injection of 92 Bcf into storage (our estimate for Bloomberg's survey was 88 Bcf). Total working gas now sits at 3,461 Bcf which is a deficit of 458 to last year and only 151 below the five-year average. Daily production was flat versus last week at 92.6 Bcf/d. The U.S. is on pace to have the largest October storage growth over the last five years, with 291 Bcf having already been injected and two reporting weeks remaining. Above-average temperatures through the end of October are forecasted throughout the U.S., which should result in larger injections compared to last year. On this week’s report for the week ending 22 October, NUS expects to see an injection between 85 and 90 Bcf, which will push inventories over 3,500 Bcf with at least two more reporting weeks left in "injection season" this year.
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