TPI Market Snapshot header
market snapshot TPI Takeaway for Monday August 15 2022

LOW STORAGE REPORT AND PRODUCTION MAINTENANCE SENDS THE MARKET HIGHER

INCONSISTENT PRODUCTION KEEPS THE PRICING HIGH
natural gas pricing - Henry Hub
Natural Gas Pricing
  • The market jumped more than a dollar last week as production cutbacks interrupted day-to-day production. As a result, the market moved more than a dollar from Tuesday to Friday.
  • The South and Midwest see cooler temperatures, but much higher temperatures are forecast for the Pacific Northwest, and New England also sees higher temperatures. This mitigates any demand relief.
  • We are approaching prime hurricane season. In the past, this meant an interruption of supply as refineries closed down. Nowadays, it may impact demand more due to fracking and drilling in the Permian Basin, which is less susceptible to hurricanes.

What Is Henry Hub? Henry Hub is a natural gas pipeline located in Erath, Louisiana, that serves as the official delivery location for futures contracts on the New York Mercantile Exchange (NYMEX). 

NATURAL GAS STORAGE REPORT

Natural Gas Storage Report
Natural gas storage report EIA
  • Lower production day/day due to maintenance issues and a weak storage report has sent pricing more than a dollar higher for the week. What looked good on Monday was no longer relevant by Wednesday. The market is as volatile as ever, with $1.00 swings week over week becoming more common.
  • The weekly storage report for Natural Gas comes out at 10:30 AM on Thursdays. This report usually has the most significant impact on pricing, along with the weather. A low storage report, below the five-year average, will often mean the market goes up. Conversely, good storage can bring the market down, but not as quickly as it can go up.

Weather:

PACIFIC NORTHWEST CONTINUES WITH HIGH HEAT

US Weather Map
Screen Shot 2022 08 15 at 81737 AM

The Pacific Northwest will see much higher than average temps this week, but even this anomaly will only bring the low to mid-80s. As a result, we may see a much-needed decrease in demand.

While this summer had brought record heat to many parts of the U.S., this may be the new normal. Temperatures have increased by 1.7 degrees Celsius (almost three degrees Fahrenheit) since 1970. The atmosphere can store about 7 percent more water for every degree Celsius. This is why we have fewer rainstorms, but these storms dump much more water when it does rain.