Market Snapshot: Monday, October 31, 2022

Natural Gas Key Takeaways

Prompt month NYMEX natural gas settled at $5.20/MMbtu on Monday, October 24, up $.24/MMbtu.
After several very bearish sessions, near-month (November) NYMEX futures reversed direction on Monday, settling higher at the end of the day.
Prompt-month NYMEX traded up $.16/MMbtu in early morning trading at $5.37/MMbtu.
Calendar year 23-27 settled at $5.03, $4.56, $4.42, $4.37 and $4.34, respectively on Monday, October 24.
Natural gas production is averaging 98.8 Bcf/day for October, unchanged from the prior month.

A mild and seasonal pattern will prevail in the coming week in the Midwest and East.
A few quick-moving cold shots are forecasted in the Midwest and East in the 11-15 day outlook.
Colder weather is forecast for early November, bringing above-normal heating demand to the northwest.

The Energy Information Administration (EIA) reported an injection of 111 Bcf into underground storage for the week ending October 14. Inventories are 3,342 Bcf, which is 3% less than last year’s period and 5% lower than the 5-year average. For October 11, Baker Hughes reported 157 gas-directed rigs, down one from last week. Oil-directed rigs were at 610, up (8) for the same period.

Forward prices sharply fell week over week, with all regions besides CAISO reporting double-digit week-over-week prices. NYISO fell 16.4%, ISO-NE fell 14.2%, and ERCOT fell between 11.1% to 11.7%.

Prices of existing homes are falling, as the Case-Schiller index fell 1.1% for the second straight monthly decline.
Later this week, the labor department will report on U.S. GDP and wages.
The Fed is poised to raise rates by .75% in its upcoming meeting.
U.S. home sales dropped for the 8th month-in-a-row in September.
Economists are expecting job losses next year, The Wall Street Journal reported.

An unseasonably mild weather pattern will grip the Midwest, East, and South through the first ten days of November. Although there will be some variability in the pattern, cool shots will be weak, and in between, much above-average temperatures will keep heating demand at a minimum and mostly off-peak hours. The Pacific Northwest will get a brief break in storminess over the next couple of days, and temperatures will average near or a little above normal through the weekend. Next week will return to a stormier, cooler pattern, increasing heating demand once again. The Southwest will be primarily mild through next week.

A boom in residential-commercial demand played against injection activity across the October 21 week, with colder weather increasing heating demand in many regions. U.S. res-comm demand surged 30% from the previous week to more than 23 Bcf/d, according to S&P Global data.

Two giant LNG plants have started construction in the U.S.; Sempra recently issued a limited notice to proceed to its contractor, Bechtel, which clears the way for the early stages of construction at its Port Arthur liquefied natural gas project in Texas. NextDecade Corp. issued a similar notice to Bechtel for its Rio Grande LNG project, also in Texas.