After a promising pullback of near-term NYMEX prices in Cal. ’22 on Monday and Tuesday, prices rallied higher as colder weather moved into the Central, Northeast, and Southeast regions of the U.S. on Wednesday and lingered into the
weekend. However, mixed weather forecasts for the balance of November are expected to keep both futures and regional spot market prices swinging unpredictably. While market attention was largely given to weather conditions and winter storage inventories, some traders did take note of the growth in daily supplied gas.
Daily production averaged 94.7 Bcf/d last week, which is the highest production level since late March 2020. Futures prices for both crude oil and natural gas are certainly in the money for most producers to return supply to the market at a profit. Should weather forecasts for December and January start showing above-average temperatures, continued daily production growth could be the bearish news that drives out speculative traders betting on depleted storage inventories driving prices higher going into summer 2022.
For more information about the natural gas markets and our price forecasts contact us below.
EIA Storage Report
For the week ending 29 October, US EIA reported an injection of 63 Bcf into storage (our estimate for Bloomberg’s survey was 62 Bcf). Storage inventories sit at 3,611 Bcf, narrowing the deficit to last year to of 313 and only 101 Bcf below the five-year average. This build puts total gas injected for October at 441 Bcf, an increase of over 270 Bcf versus October last year.
Daily production during the reporting period grew to an average 94.7 Bcf/d - a growth of 2.3 Bcf/d from the prior week. New supply arrived just as a short term winter weather arrived throughout the U.S. last Tuesday and tightened regional supply/demand balances. In observance of Veteran’s Day, this week’s EIA Storage Report will be released Wednesday at Noon Eastern. A small injection is expected.
The information above is an excerpt from the applicable report referenced above. For a full and complete copy of this report please complete the form below, sign up for our newsletters or schedule a virtual meeting at your convenience.