COLD FRONT AND GEOPOLITICS MAIN DRIVERS OF THE MARKET RIGHT NOW
COLD FRONT KEEPS MARKET ABOVE $4.00
Last week, a sub-200 withdrawal of gas could not stop the market from climbing above $4.50 as the latest cold-front moves across the U.S.
This latest front could have weaker effects at the end of February early March. The normal for that time of year may alleviate demand.
Europe’s (and the world’s) fears of a Russian invasion of Ukraine now appear more valid as the U.S. now says that invasion is imminent. Naturally, this will send prices shooting up.
Also:
We are just one month and one week away from the start of injection season, when most storage reports reflect an injection of natural gas rather than a withdrawal.
Currently, we are 11.6% below the 5-year average and 17.5% below last year’s storage levels. Unless our outlook improves, we will be looking at one of the lower storage levels for the start of injection season since 2018.
Production is growing over the last few weeks, with two more dry gas wells going online and any freeze-offs in the Permian Basin going away. This will allow production to creep closer to95.0 Bcf.
2021 U.S. NATURAL GAS SUPPLY BREAKDOWN
2021 U.S. NATURAL GAS DEMAND BREAKDOWN
COLD FRONT SWEEPS ACROSS THE US
Cooler forecasts for late February and early March have kept the market above $4.50. If this latest cold front does not increase demand as much as anticipated, mainly due to higher average temperatures, we may see the market drop back below $4.00
While weather-related demand is the primary driver in the market, geopolitical events, mainly the expected invasion of Ukraine by Russia, could send pricing skyward unless and until production increases to match what may be taken off the market as part of Russian sanctions.
