NATURAL GAS DEMAND WITH EXPORTS
Even though we now have record natural gas production, we also have record demand for natural gas. When you add in the LNG exports, current demand is above 2022 and 2021 and higher than the five-year average and the five-year average range. Demand and exports have been higher this summer, which is the main reason our surplus supply of Natural Gas is dwindling.
WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK
At least until we get into colder weather, it appears Natural Gas has settled between $3.00 and $3.50 for this year and next. However, 2025 and 2026 are closer to $4.00 as demand remains high. This is why 24-month agreements have better rates than 36. The 24-month agreement blends one lower-priced year with one higher-priced year. The 36-month agreement adds in another high-priced year.
RIG COUNT INCREASES
•The rig count reduction was reversed last week as the Natural Gas Dry Well rig count added eight producing rigs. We are still 45 rigs below what we had last year, but more advanced drilling techniques have made each rig more productive. We shall see if these extra rigs results in higher production.
EIA: WEEKLY NATURAL GAS STORAGE
Also, keep an eye on our gas storage. Due to high demand, we have had weak injections this summer. At the beginning of August, we were 25.3% above last year’s storage level and 14.6% over the five-year average. We are 14.3% above last year and 5.9% above the five-year. If we get below the five-year average, gas prices will rise sharply.
NYMEX 12-MONTH ROLLING STRIP – NOV-OCT
ALL ABOUT THE NYMEX TWELVE-MONTH STRIP
- The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
- A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
- The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
- The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
- The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
- The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.