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6-10 DAY AND 8-14 DAY OUTLOOK

A warmer weather pattern will gain ground over the US next week with highs of 30s to 50s over the northern US and 50s to lower 80s over the southern US. There will also be heavy rain over Texas & the South next week w/local flooding. Natural gas demand will be light for the week.

EIA: NATURAL GAS STORAGE

The latest EIA gas storage report was right at -154 Bcf. This number aligned with most experts’ opinions of -154 Bcf withdrawal. This week’s storage report may cause a temporary shock in the market as it will cover the period between Jan 12th-18th, when demand was at its highest, and we could easily see a withdrawal of over -200 Bcf. I say temporary because the large withdrawal was pretty much baked into the pricing earlier in the month.

NYMEX GAS PROMPT MONTH PRICING TUMBLE

Even as the country was going through its worst winter freeze, the markets were looking a few days ahead. After reaching a high of $3.37 on January 9th, pricing has fallen more than a dollar to $2.32 and shows no signs of slowing down. This has come about because of unseasonably warm temperatures on the way, especially in the Northern half of the US.

NYMEX CALENDAR STRIPS

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.

ESTIMATED NATURAL GAS STORAGE FOR 2024

Exports continue to have an effect as we now export record amounts of Liquid Natural Gas from the Gulf Coast, about 15 Bcf a day. Combine that with the 6-7 Bcf a day being exported by pipeline to Mexico, and it is no wonder that the United States is the largest exporter of LNG in the world by a good margin.

NATURAL GAS PRODUCTION

Production dipped a bit this week due to well-head freeze-offs in North Dakota and the Rockies that cut production by almost 10 Bcf daily. The warmer weather should see those production numbers back up near 105 Bcf unless pricing drops below $2.00; in this case, we should see production cutbacks to push the price up.